PhotoWorks lets users share and store digital photos, set up hosted Web sites, and create personalized cards, T-shirts and other items.
The acquisition follows closely on the heels of American Greetings' purchase of photo-sharing site Webshots in October from CNET for $45 million.
In a prepared statement, American Greetings' CEO Josef Mandelbaum said the PhotoWorks deal would complement the Webshots acquisition and allow its customers to create high-quality physical products with their own photos.
The acquisition is expected to close in late January 2008
--Mark Walsh