Moonpig, which had a turnover of £38m for the year ending April 2011, will continue to operate as a separate brand but joins forces with PhotoBox to take advantage of "emerging opportunities" in the web-to-print market.

Nick Jenkins, founder and chairman of Moonpig.com will take on an advisory role to the enlarged group's board of directors. Photobox chief executive Stan Laurent becomes president and chief executive of the group.

Jenkins said: "Everyone at Moonpig has thoroughly enjoyed building Moonpig into a household brand. Every morning the equivalent of a Premier League football stadium full of people get a Moonpig card and they love them.

"We now want to build on that success. The explosion in digital photography over the past few years has been evident in the number of our customers using their own photographs to great and often hilarious effect in our cards.

"Stan and I both believe that we can now offer a much wider range of photographic products to our customers while adding our own Moonpig creativity. We can also take our core greeting card product to countries which would be difficult to access as a standalone business."

The £120m payable to Moonpig will be satisfied by existing shareholders in the greetings card business rolling over a portion of their respective shareholdings in to the share capital of the enlarged group, bank lending and new equity.

According to PhotoBox, new equity will be raised through existing shareholders – Highland Capital Partners, Index Ventures and Harbourvest, as well as a group of new private equity investors led by Insight Ventures alongside Quilvest Ventures and Greenspring Associates.

Barclays Bank and Royal Bank of Scotland are providing the senior credit facility for the deal.

For more, see this week's PrintWeek.