Teen social network website Stardoll is acquiring rival Piczo for an undisclosed sum to create a unique youth-oriented network with a worldwide reach of 20 million users a month.

Though financial details of the deal have not yet been unveiled, but the merger is described as a 'merger of equals'. Further to the merger, the individual brands will be maintained.

It is expected that the merged entity will be led the Stardoll chief executive, Mattias Miksche.

The new entity Stardoll Network, in addition to Piczo will comprise another newly launched website of Stardoll 'Paperdollheaven.com', and the three combined will target the 'tween' and teen age groups aged between five and 20.

Jim Conning, founder of Piczo said that the merger with Stardoll would allow an even more valuable proposition for advertisers seeking to reach the young audience.

Stardoll launched in 2003 in Sweden has 27 million registered users. The site takes young girls to the virtual fashion world of dressing up celebrities, create 'MeDolls' as well as design and sell virtual wardrobes and soon turned out to be a smash hit.

Stardoll has about 51 per cent of its traffic from Europe, 40 per cent from the Americas and the remaining 9 per cent from the Asia-Pacific region.

Piczo was founded in 2004 in California as a social networking site for teens allowing them to build and customise their own web pages and network with friends. The site with 10 million monthly users and 30 million registered, was facing stiff competition from the likes of 'Bebo' and 'MySpace'.

Stardoll launched Paperdollheaven in Decemeber 2008 aiming at younger girls. The site has a huge assortment of doll games featuring celebrities, models, athletes, magical fairies, cute animals and so on.

''Our goal has always been to create places online where girls can have fun, learn, and make friends from all over the world in a safe environment,'' said Miksche.

''In just three years, Stardoll.com has become the most popular online destination for this demographic and we are excited to strengthen our offering by adding Piczo and Paperdoll Heaven to the network,'' he added.

Piczo's managing director, Chris Seth, will takeover as the executive vice-president of international advertising and general manager of the combined UK operation.

''Each website has different functionality but the audience cross-over is a good fit," said Seth.

"You do need to provide scale in the market, it is something that has made perfect sense in the offline world for decades, and the merger will create a more compelling proposition for advertisers," Seth continued.

Jim Conning, the founder of Piczo, is understood to be staying with the new operation.

He said, ''Both sites are focused on providing fun ways for members to explore and express their creativity online. We look forward to working with the Stardoll team to make Piczo even better.''

It is believed that Piczo's chief executive, Jeremy Verban will leave the new company.