United Online branches out

Internet service provider United Online (UNTD) is branching out in a most unexpected direction. The Woodland Hills, Calif.-based operator of the NetZero and Juno ISPs and the Classmates and MyPoints online loyalty marketing services is buying FTD (FTD), the Downers Grove, Ill., flower company. The deal is worth $456 million in cash, stock and United Online notes. Though United Online says the deal is worth more than $15 a share to FTD shareholders, FTD shares were up just over 1% in midafternoon trading Wednesday at $13.69.

An Internet company buying a flower company smacks of desperation, a la telco Level 3’s (LVLT) March 2002 purchase of a big software reseller in a bid to stay in compliance with its debt covenants. That isn’t stopping United Online chief Mark Goldston from offering up the hard sell, though.

“As one of the premier branded marketing companies in the U.S., United Online anticipates being able to further enhance a world-class brand name, FTD, and build upon the fine work done by FTD’s management team in creating a highly profitable business,” Goldston says. “This transaction will meaningfully diversify our revenue base within a large global market experiencing significant migration to the Internet.”

But it isn’t just the expanded revenue base that makes this deal smell so sweet to Goldston. “After spending many years marketing major retail brands in the fragrance, cosmetic and other image product industries and managing consumer retail businesses,” he says, “I am especially looking forward to working with the thousands of FTD affiliated florists and the potential for developing specific programs designed to further invigorate the FTD florist channel and increase the number of orders delivered to that trade channel.” So Goldston is clearly hoping this will be the rare acquisition that drives, ahem, organic growth.