Alloy Acquires 360 Youth for $43 Million

By @NY Staff

Offline-online marketer Alloy, Inc. , hot on the acquisition trail for the youth market, has scooped up high school and college marketer 360 Youth in a deal worth $43 million.

By purchasing the Cranbury, NJ-based 360 Youth, Alloy inherits advertising and marketing deals with college bookstores, student unions, dining services, residence halls, athletic centers and high school administrations around the nation.

The cash and stock purchase of 360 Youth, which had been a unit of MarketSource Corp., is part of the New York-based Alloy’s goal to increase its reach with the growing and lucrative teen and college-age market.

Some of 360 Youth’s products and school-based marketing programs include “Campus Source” and “High-School Source”, back-lit boards placed in high school and college campuses that reach roughly 11 million students.

The company has also been successful with its “Campus Trial Pak”, a product sampler that is sent out before students return to school, and “Campus Fest” a co-op event that takes place during the Spring Break weeks and targets about one million students.

Since it was founded in 1975, 360 Youth’s promotions and other marketing programs have grown to reach about 40 million so-called Generation Y students around the nation.

Alloy said it plans to issue about 1.8 million shares of common stock and would pay about $13.4 million in cash for 360 Youth, which was a unit of MarketSource Corp. The deal includes performance and earning targets in order to complete the acquisition.

The acquisition is another in a string of purchases that Alloy has made this year of companies that target the high school and college age market, none of which rely on online advertising dollars to any extent.

In October, Alloy bought BMX biking site Dan’s Competition, Inc. for about $38.6 million in cash and stock. The company, markets BMX bikes and related equipment to teenage boys through online and offline channels.

In July, Alloy bought CASS Communications, a niche marketer to the teen and college crowd, for $33 million worth of cash and stock and in April, it shelled out $14.5 million to purchase college resources firm Carnegie Communications.

With the CASS purchase, for example, Alloy got a company that reaches about 28 million readers, through college and high school newspaper advertising; Carnegie Communications is a publisher with about thirty titles geared toward college students.

Alloy officials said they expect the acquisition of 360 Youth’s sponsorship and advertising business to add between $15 million and $17 million to Alloy’s annual sales, which have been growing, along with the company’s losses.

During the second quarter, for example, its net loss was $11.3 million (51 cents per share), compared to the $6.9 million it lost in the same year-ago period. Revenues for the second quarter were $28.7 million, up from $12.3 million during the same, year-year ago period.

Shares of Alloy were down slightly at $16.32 during early trading on the Nasdaq after the deal was announced. Alloy is planning to release third quarter results on Wednesday after the market closes.

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