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Hi5, the San Francisco social networking company led by Seattle gaming and advertising veterans Bill Gossman and Alex St. John, has been acquired by Tagged Inc. for an undisclosed price. Together, the combined company will have about 20 million monthly users and 330 million registered users.

The San Francisco Chronicle notes that the acquisition comes with a “twist,” pointing out the deal is structured in such a way that gives executives from hi5 an opportunity to create a new company.

St. John

It is unclear what the company is working on or where it will be based, though the Chronicle says it could be in the social gaming arena. We’ve reached out to St. John, a former Microsoft employee who went on to create Redmond gaming startup WildTangent, for comment and we’ll update as we hear more.

Gossman is former entrepreneur-in-residence at Mohr Davidow and has been involved in executive roles at a number of Seattle area companies, including Audience Science, @Mobile and nLight.

I am curious where Gossman and St. John, if they are indeed the folks behind the new startup, will decide to locate the new company.

UPDATE: St. John declined to talk about his plans for the new startup, telling GeekWire that they’ve got their hands full taking care of the transition to Tagged. He promised more details next year.

Hi5 raised $14 million in venture capital financing from Crosslink Capital, Mohr Davidow Ventures and others last year. The Wall Street Journal reports that Tagged, founded in 2003, is profitable with revenues expected in the $43 million to $45 million range this year.

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