Groupon to Acquire LivingSocial’s Ticket Monster for $260 Million; Q3 Revenue Misses
LivingSocial has its buyer for Korean subsidiary Ticket Monster: Its biggest competitor, Groupon.
Groupon said it will pay at least $100 million in cash and up to $160 million in stock for Ticket Monster, known locally as TMon. AllThingsD had recently reported that LivingSocial was close to finding a buyer for the business it acquired in 2011. The deal is expected to close in the first half of next year.
“Ticket Monster is a perfect fit for Groupon as we continue to transition our business globally from a flash sale email model to a mobile commerce marketplace,” Groupon CEO Eric Lefkofsky said in a statement. “Ticket Monster has a vibrant and growing marketplace in one of the world’s largest e-commerce markets.”
Groupon said Ticket Monster has an annualized run rate of $800 million in billings. But unlike Groupon, whose cut of individual deals is typically at least 30 percent, Ticket Monster’s cut is at best in the low teens percent, according to a source. That means revenue at the Korean deals marketplace is likely at best around $100 million.
In August, Groupon said its board had approved a $300 million share buyback program, in part to pursue acquisitions.
The proceeds from the sale give LivingSocial some additional money to try to steady its core U.S. business. And, in an interview, LivingSocial Chief Financial Officer John Bax hinted that the company wouldn’t hold onto the estimated 16.5 million shares of Groupon stock expected to be part of the deal.
“It’s a public company, their stock is liquid,” he said. “It’s easy to sell.”
Groupon also reported third-quarter revenue of $595 million, well below the analyst estimates of $616 million. Earnings per share of two cents beat expectations of one cent.
Lefkofsky said in an interview that changes to how Gmail filters marketing emails such as Groupon’s decreased email open rates in the third quarter and had a slight effect on revenue. Less than 10 percent of Ticket Monster sales originate with email, he said.