ITV, Britain's biggest commercial TV network, on Tuesday snapped up Friends Reunited for 175 million pounds (258 million euros, 304 million dollars) from the website group's founders and employees.
The deal comprises an immediate payment in cash and shares of 120 million pounds, plus 55 million pounds during 2009 depending on performance, ITV said in a statement to the London Stock Exchange.
The purchase of Friends Reunited, which allows users to locate old school friends, will make ITV.com the eighth largest website in Britain in terms of people logging on. It is bettered by a handful of websites including search engines Google, Yahoo! and MSN, Internet auction giant eBay and news site BBC Online.
Steve and Julie Pankhurst, the husband and wife team who set up the Friends Reunited with their business partner five years ago, stand to net an estimated 30 million pounds from the deal.
"When we started Friends Reunited in our spare bedroom in July 2000 we had no idea that what began as a hobby would gain phenomenon status, let alone develop into a family of successful websites," Steve Pankhurst said in the statement.
The site has expanded rapidly and now has 15 million members - some 50 percent of the adult population with access to the Internet - after moving into areas such as Genes Reunited, a site that allows people to trace their family tree. Other websites include Friends Reunited Dating, Friends Reunited Jobs and social networking site Friends Reunited Connections.
"The acquisition of Friends Reunited is a key step in the delivery of our strategy to drive new revenue streams for the company," said Jeff Henry, director of the ITV Consumer unit, said in the statement. The brand will not change or merge with any other ITV sites. However, the deal will allow ITV to cross-sell from site to site in areas such as dating, recruitment and classified advertising.
Henry later told reporters in a conference call that the broadband Internet market in Britain was reaching a "critical mass".
The group's flagship ITV1 terrestrial channel is in long-term decline due to the growing popularity of digital television. While new channels have helped ITV grab its own share of the digital audience, the group has also shifted into new growth areas, such as the Internet.
The Pankhursts had already given up the running of the site in 2003 when they handed over control to a management team.
With over one million paying subscribers, Friends Reunited is forecast to report turnover of 12.4 million pounds this year and earnings before interest and taxation of 6.6 million pounds. Next year, sales are predicted to rises to 18.7 million pounds.