ITV, the UK commercial television company, has acquired the Friends Reunited web site from its founders for £120 million in cash and shares.

Friends Reunited, a web site that links people through their former schools, colleges and employers, was originally established by Steve and Julie Pankhurst from the spare bedroom of their suburban semi in north London.

The couple continued to run the site along with co-founder Jason Porter before handing it over to a full-time management team headed by Michael Murphy, a former chief operating officer of the Financial Times. It went on to become an extraordinary success, with 12 million registered users and a million paying subscribers.

“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 web sites,” said Steve Pankhurst.

The company expects to turnover £12 million in the year 2005, with earnings of £6 million before tax.

The price paid by ITV concerned some major shareholders of the leading commercial broadcaster which recently celebrated its fiftieth anniversary.

It represents a multiple of 18 times the current earnings of the web business, with provision for a further payment of up to £55 million in 2009 based on performance targets.

Jeff Henry, the director of the ITV consumer division, charged with building businesses which create and monetise direct consumer relationships for the company, described the acquisition as a key step in the delivery of our strategy to drive new revenue streams for the company.

“I am confident that Friends Reunited’s unique sites and comprehensive subscription base, combined with ITV’s services and vast range of content will prove both compelling and profitable,” he said.

The broadcaster aims to develop links between the and Friends Reunited web sites, integrate billing and subscription services, and develop new services and revenue streams in dating, recruitment, and classified advertising.

How this will play with the members of the Friends Reunited community remains to be seen.