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Summary:

Updated below: Health information social networking site DailyStrength has been acquired by HSW International, the digital content company t…

Updated below: Health information social networking site DailyStrength has been acquired by HSW International, the digital content company that is a spinoff from HowStuffWorks.com (which later got acquired by *Discovery* Communications). Terms of the deal were not disclosed.

DailyStrength raised a seed money and a first round, both from Redpoint Ventures, and the total funding range was around $7 million. The site was launched in March last year, by CEO Doug Hirsch, a former senior exec of Facebook and one of the first employees of *Yahoo*. It hosts about 500 communities focused on issues such as weight loss, divorce, parenting and illnesses. Hirsch will join HSW International as SVP with responsibilities including DailyStrength and the company’s social media strategy.

HSWI is focused on China and Brazil markets, as the exclusive licensee of content from HowStuffWorks. This deal will bring a lot of HSWI content into DailyStrength’s website, among other synergies. More details in release.

Update: A commenter below alerts us to the SEC filing which details the sale price: HSWI paid $3.125 million in cash, and will pay another amount of up to $3.525 million, based on pageviews increase (interestingly, not based on revenues, but only pageviews increase).

  1. terms of the deal may not have been disclosed in the release but they are public on edgar:

    http://biz.yahoo.com/e/081203/hswi8-k.html

    On November 26, 2008, HSW International, Inc., or HSWI, entered into a merger agreement pursuant to which HSWI agreed to acquire all of the capital securities of Daily Strength, Inc. in exchange for cash. The transaction was structured as a reverse triangular merger in which Daily Strength became the wholly owned subsidiary of HSWI. The transaction closed simultaneously on November 26, 2008.

    HSWI paid $3.125 million at closing. HSWI is contingently obligated to pay an earnout of up to an additional $3.525 million. The earnout is payable by HSWI if in any two months before November 26, 2010, the total page views of

    � DailyStrength.org,

    � any HSWI website or section thereof that Douglas J. Hirsch or Daily Strength is managing, and

    � the social media webpages or section of an HSWI health-focused website

    exceed a designated number of page views. The earnout will be paid in five equal installments, provided that the level of page views is achieved for each installment. The level of page views increases for each installment.

    Daily Strength agreed in the merger agreement to indemnify HSWI for breach of any representation, warranty or covenant contained in the merger agreement and other losses and expenses arising out of the merger agreement, if any. An amount equal to 45% of the earnout is available to cover indemnity claims. In addition, $150,000 of the purchase price will be held in escrow for two years after the closing to pay indemnity and other claims.

    There is no material relationship between HSWI or Daily Strength or any of their affiliates, other than the merger agreement.

    A copy of the merger agreement is filed as an exhibit to this report.

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