Arts Alliance Media (AAM),majority shareholder in leading UK online DVD rental service Lovefilm, hasexpanded its business into Europe.

AAM has taken a controlling stakein Swedish on-line DVD rental company, Boxman.

Boxman is the second largestonline rental DVD rental company in Sweden, with over 14,000 subscribers and was established in 2003.

AAM said it chose Boxman becauseof its strong management team and fast growth strategy. It plans to useBoxman as a base for further Scandinavian expansion.

"The deal with Boxman is a logicalstep in our plans to expand our reach outside the UK," said Howard Kiedaisch,chief financial officer of Arts Alliance Media. "With this deal, we willbecome the largest on-line rental service available, with a firm internationalfootprint in Europe."

Following the deal, Boxman willretain its own brand and employees, as well as its key partners, including TV4, Phillips, Aftonbladet and Tradera.

Lovefilm was the first company topass the 100,000 subscriber mark in the UK.

Earlier this month, Lovefilm rivalVideo Island said that it was planning to launch in at least one other Europeancountry by the end of the year.