MemberWorks Hooks Up With Lavalife

Affinity marketer MemberWorks is acquiring dating site Lavalife for about $115 million, marking the third major matchup in the hot social networking space this week.

Representing one of the most talked-about current trends, social networking sites are being wooed and won by corporate suitors with enormous velocity these days. On Monday alone, InterActive Corp. said it would acquire business networking site ZeroDegrees, and Tribe.net, a networking site with a classifieds model, partnered with CareerBuilder.com.

Dating and relationship sites such as Match.com have become among the biggest paid content generators on the Net, according to comScore Networks.

The Stamford, Conn.-based MemberWorks, a brick and mortar company founded in 1989, offers discounts to its members from companies such as Disney. The firm hopes the acquisition will help it expand the amount of marketing it does on the Internet.

“We have been expanding and diversifying our market on the Internet in the last couple of years as it became more mass market. Last quarter, 30 percent of our new members were acquired through online channels such as AOL banner advertising or partnerships,” said James Duffy, CFO of MemberWorks.

“It’s [the acquisition] a big opportunity to get more members. We also have the opportunity to cross-sell to each others’ customer base. We will provide customized programs and discounts to LavaLife’s customers and put together a personal service to offer to our membership,” Duffy said.

Lavalife, headquartered in Toronto, is itself a brick and mortar business, having started 16 years ago as a telephone dating service. It has had an online service for about three years, Duffy said.

Lavalife had revenue of $77.1 million and earnings before interest, taxes, depreciation and amortization of $13 million for its fiscal year ended Sept. 30, 2003.

Stamford, Connecticut-based MemberWorks expects the deal to be neutral or add to its fiscal 2005 earnings and to boost fiscal 2006 earnings. Lavalife anticipates revenue of $90.2 million for fiscal 2005.

Lavalife senior management will purchase approximately $9 million in MemberWorks restricted common stock at closing, the companies said.

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