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There may be one of the stranger mergers out there today in Internet land, as United Online, Inc. (NASDAQ: UNTD) is acquiring FTD Group, Inc. (NYSE: FTD) in a merger valued at some $800 million.

FTD shareholders will receive $7.34 in cash, 0.4087 shares of United common stock per FTD share, and $3.31 principal amount of United Online in 13% senior secured notes due in 2013. This total consideration, before any share change in UNTD will equate to $15.08 (based upon $10.83 United share price.

This furthermore comes to an total consideration received of $456 million to FTD, composed of $222 million cash, 12.35 million shares of UNTD, and $100 million in the debt.  After payments and disbursements have been made, FTD holders will still own approximately 15% of the combined United Online.

To complicate things further, United Online may elect to increase the cash consideration payable to FTD’s
stockholders by $2.81 in full substitution of the debt, so FTD stockholders could receive a total of $10.15 in cash and 0.4087 shares of United Online per FTD share.

We had featured United Online in our "10 Stocks Under $10" weekly newsletter, and one issue of our "Special Situation Investing Newsletter" featured United Online as one of teh small cap Internet stocks that could actually be rolled up by a larger player.

So far UNTD shares are up almost 8% pre-market on thin volume trading, and FTD shares are up almost 7% in pre-market trading; although the share volume was very thin.

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Jon C. Ogg
April 30, 2008

Jon Ogg produces and edits the Special Situation Investing Newsletter for 247WallSt.com.