• by Wendy Davis  @wendyndavis, February 15, 2006

In a major consolidation of the e-mail services industry, DoubleClick's e-mail business will be acquired by Alliance Data Systems Corp.'s Epsilon Interactive for an estimated $90 million. The deal is expected to close by the end of the first quarter.

The new entity, which will operate under the Epsilon Interactive name, will be one of the largest in the e-mail services space. The company expects to send 19 billion e-mails this year on behalf of more than 500 clients, said Al DiGuido, president and CEO of Epsilon. The company will be headquartered in New York, with North American offices in Colorado, Denver, San Francisco, and Toronto, and worldwide offices in the United Kingdom, Ireland, France, Germany, Japan, China, and Australia.

The roster of marketers using DoubleClick's e-mail services includes online travel company Orbitz, Internet company AOL, consumer packaged goods companies Unilever and Procter & Gamble, and retailers J. Crew and Buy.com. Epsilon's clients include online travel marketer Expedia, financial services company Capital One, and the Washington Post.

DiGuido said that neither Epsilon--formerly known as Bigfoot Interactive--or DoubleClick would have to lose clients due to conflicts of interest, because their contracts with marketers don't provide for exclusivity. He also said that Epsilon intends to absorb all 220 employees at DoubleClick's e-mail unit.

The deal is one of several recent consolidations in the e-mail service industry. Last week, Premiere Global Services Inc. acquired e-mail services firm Accucast Inc. In addition, J.L. Halsey Corp. recently acquired both Email Labs and Lyris.

David Daniels, a Jupiter Research analyst, said he expects more industry mergers to follow. "It's been a very active space, and I don't see too many signs of it slowing down," he said.

Last summer, Jupiter Research found that more than half of the 30 companies then providing e-mail services were independent--and presumably, ripe for takeover. "There's still a great opportunity for further consolidation," Daniels said.

Last July, Hellman & Friedman LLC, a San Francisco-based private equity firm, acquired DoubleClick for about $1.1 billion. The expectation at the time was that Hellman would break up DoubleClick and sell it piecemeal.