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Merger talks envelop e-card companies

American Greetings and Egreetings are in merger talks that could lead to the formation of a powerful rival to the Web's leading electronic greeting card maker, Excite@Home's Blue Mountain Arts.

American Greetings and Egreetings Networks are in merger talks that could lead to the formation of a powerful rival to the Web's leading electronic greeting card maker, Excite@Home's Blue Mountain Arts.

In documents filed by Cleveland-based American Greetings with the Securities and Exchange Commission, the company said that merger talks have occurred in the past and that "certain discussions regarding specific combination proposals are currently under way."

American Greetings' filing was because of its purchase of offline card maker Gibson Greetings last month. Gibson owns 20 percent of Egreetings, said Andrew Moley, chief financial officer at Egreetings. He declined to discuss the statements made in American Greetings' filing directly, but he said, "Talks don't necessarily mean that there is a merger deal taking place."

Like most e-commerce sectors, traffic for online greeting card companies has declined, and share prices have plummeted since the holidays. Egreetings stock has lost 60 percent of its value since the company's December initial public offering.

Formerly the second-highest trafficked greeting card site, San Francisco-based Egreetings has recently fallen behind American Greetings. Since cutting a five-and-a-half year, $100 million deal to provide online greeting cards on America Online's sites, American Greetings has steadily increased its traffic.

Even with its gains, the company is a distant second to Blue Mountain. According to a February report by Web site monitoring firm Media Metrix, Blue Mountain had 16.7 million unique visitors, while American Greetings had less than half that number with 7 million.

Egreetings was third with 4.2 million visitors.

Should they decide to merge, American Greetings and Egreetings, which offer their online cards to customers without charge, would still be confronted by the task of turning high traffic numbers into profits.