Jason Del Rey

Recent Posts by Jason Del Rey

Despite Hedging, LivingSocial Is in Discussions to Sell Korean Deals Site Ticket Monster

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LivingSocial is engaged in serious talks to sell its Korean deals business Ticket Monster, which it bought in 2011, according to sources familiar with the discussions.

At this point, sources said, it appears more that it’s a matter of when the deal gets done, not if. Sources noted that the troubled daily deals site has been engaged in discussions with a number of possible buyers over the past months, but declined to name them.

In a carefully worded statement, LivingSocial CFO John Bax said this week that a deal had not been reached, but little else. Bax said that “there is no transaction pending or anything like that. A lot of people are interested in it, because it’s a great business,” in an interview with the Washington Business Journal.

Added Bax: “There has been no transaction.”

Clever!

Briefed on the details of this post, a LivingSocial spokeswoman said in an email, “the information in the WBJ story is correct and we have no further comment.”

(PandoDaily also reported recently that a deal was in the works, citing a report in a Korean newspaper.)

Ticket Monster, or TMon as it is better known in Korea, is perhaps LivingSocial’s easiest and most obvious asset to unload. It sells services and products at a discount, much like LivingSocial and Groupon — the two businesses it looked to for inspiration when it launched in 2010. But unlike its two American counterparts, its ratio of products to services skews much more toward products.

When LivingSocial acquired Ticket Monster in 2011 for what was likely at least $100 million in cash and stock, the deal seemed to make some sense; LivingSocial was expanding internationally at a furious pace, and Ticket Monster was expected to be the crown jewel of LivingSocial’s international strategy and the beachhead into the rest of Asia.

But as the daily-deal fad started to lose momentum, LivingSocial began abandoning its international expansion in favor of trying to steady its core U.S. business, and the acquisition began to make a lot less sense.

This year, Ticket Monster is on track to generate $1 billion in gross billings, Bax told AllThingsD in a recent interview. But TMon’s cut of that is in the low teens percent, at best, according to a person familiar with the business, meaning revenue this year will be at best slightly more than $100 million.

TMon did record positive EBITDA in the first half of this year, Bax also said in the previous interview. But neither LivingSocial nor Ticket Monster are throwing off the profits necessary to help each other, and since the companies are run as separate entities, there’s probably no longer any strategic reason for the marriage.

In addition, LivingSocial could certainly use the money from a sale as it looks to stabilize its business and carve out a new identity and differentiated path for itself.

The company’s revenue grew just six percent in the first half of this year to $264 million, while it recorded a net loss of $81 million. Along the way, it got hit with a hack of customer information and later shut down its local-events business (in quite the sloppy manner).

As a result of all these troubles, said sources with knowledge of the situation, look for a sale sooner than later.


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