J.L. Halsey Buys EmailLabs For $20 Million

Increasing its stake in the e-mail services industry, J.L. Halsey Corp. Wednesday said it will pay $19.5 million to acquire Uptilt Inc., which operates as EmailLabs. The addition of the hosted software and services provider is meant to complement Halsey's acquisition of Lyris in May, according to the holding company's Chief Operating Officer, Luis Rivera.

"The e-mail marketing space has gotten a bad rap in the past few years, because of spam and delivery issues," Rivera said, adding: "The return on investment is really very good."

When the deal closes, EmailLabs Chairman and CEO David Sousa and CTO Adrian Liang are expected to resign their positions, but remain as advisors.

Rivera said Halsey is aggressively seeking other acquisition targets, continuing the recent consolidation in the e-mail services market. In September, Epsilon, a credit card transaction and marketing services provider, said it would acquire e-mail marketing giant Bigfoot Interactive for $120 million.

But it's not clear that Halsey's recent acquisitions will amount to much, given the intense market competition.

"Consolidation is no surprise, because e-mail marketing as a stand-alone [service] doesn't have much of a future," Forrester analyst Shar VanBoskirk said. "But it seems to me that both Lyris and EmailLabs offer such basic services, it might not give Halsey a competitive edge against more sophisticated service providers."

Ninety-seven percent of EmailLabs' revenue comes from hosted e-mail marketing services. Revenue last year was $5.7 million, which the company has already surpassed in the first three quarters of this year, Rivera said.

Just last week, EmailLabs and Web analytics firm Coremetrics announced a partnership to integrate and jointly sell their applications, and in mid-September they debuted several new features, including integration with analytics provided by WebSideStory.

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