Stardoll, the Swedish based paper doll community, has announced that it has acquired Piczo, a social networking site aimed at teenagers in a cash and shares takeover. Details of the merger are very limited, but according to a Times Online article Stardoll will become profitable with the takeover.

Stardoll currently has around 20 million unique visitors a month visiting the site and an annual turnover of above 10 million euros. The idea behind the merger, according to Times Online, is to bring more value for the advertisers – both sites share similar demographics and many users on Stardoll link to Piczo. A good position to start off with. An educated guess, looking at various sources online, would be that Stardoll has about three times the registered members of Piczo – 30 million and 10 million respectively.

From this point of view, it makes complete sense for Stardoll to acquire Piczo and grow its properties online. With the acquisition, Stardoll will become the single most largest network online to target teenager girls (about 75% of Piczo’s users are teenage girls). What Stardoll is able to do with its network is tailor it further to the needs of the advertisers than other broader social network services like Facebook, for example, can. The reason is simple, the passion and niche goes a lot deeper in services such as Stardoll than it will in Facebook. With deeper integration into the service, Stardoll is able to charge higher premiums from the advertisers.

It’s hard to say if the downturn in the economy had something to do with this merger, but my bet is that it happened exactly because of that. In general, it is said that valuations go down when the economy plummets. My guess is that Piczo has become an attractive opportunity for that reason. Stardoll has been very successful and has also been growing organically very strongly – thus showing fewer effects of the slowing economy.

Furthermore it is great to see a Nordic company takeover its competitor from the Valley – there haven’t been too many of those around. However, it is hard to say how this merger will show to the users – if it will in any way other than similar kind of advertisement solutions. One thing is sure though, these sort of activities will create more interest towards entrepreneurship in general – exactly what we need more of here in the Nordics.