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United Online To Acquire Classmates Online

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[ Technology]

United Online also announced today that it has signed a definitive agreement to acquire Classmates Online, Inc., a leader in online community-based networking, for approximately $100 million in cash, net of cash acquired.

Classmates Online, Inc. operates Classmates.com, connecting millions of members throughout the U.S. and Canada with friends and acquaintances from school, work and the military. Its Classmates International subsidiary also operates leading community-based networking sites in Sweden, through Klasstraffen Sweden AB and in Germany, through StayFriends GmbH.

At September 30, 2004, Classmates had 1.4 million pay subscribers, 10.3 million monthly active accounts, and more than 38 million registered members, giving it a significant database of self-registered personal information. During the nine months ended September 30, 2004, the company generated revenues of $54 million – 75% from subscription fees – and operating income of $3.7 million, after $4.9 million of depreciation and amortization expenses. The company has 175 employees, and United Online intends to maintain Classmates’ operations in Renton, WA.

The acquisition is expected to be completed in the fourth quarter of this year, subject to customary closing conditions, including regulatory approval. Classmates Online’s Board of Directors and shareholders have approved the transaction.

“Our proposed purchase of Classmates is consistent with our stated mission to expand our network of affordable, high-quality consumer Internet subscription services,” Goldston said. “Classmates has built a highly recognized, market-leading brand that offers a range of community-based networking services that make it a top destination for consumers seeking to find, connect and keep-in-touch with friends and acquaintances from their school, work or military affiliations.

Together with United Online’s 6.6 million active accounts, the addition of Classmates will give us a powerful audience of more than 16 million active accounts, providing additional marketing opportunities and extending our advertising reach. We look forward to welcoming Classmates’ team of skilled employees to the United Online family.”

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United Online To Acquire Classmates Online
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