Groupon is in talks to spin off Korea’s second-largest e-commerce company Ticket Monster for a possible value of $1 billion, The Wall Street Journal reported. If successful, Groupon could make as much as four times its investment back after just one year, when the company was bought for just $260 million from LivingSocial.
Groupon’s attempt to spin off Ticket Monster, which like Groupon was an e-coupon website that is trying to adjust to a direct merchandising company due to shifting customer demand, follows the announcement from Yahoo! that it would be spinning off its 40-percent stake in Alibaba, valued at close to $40 billion, or a majority of the company’s $46 billion valuation. Assuming the $1 billion valuation of Ticket Monster to be true, it would represent 20 percent of Groupon’s existing valuation of $5 billion, which is a result of its 30-percent decline in share price over the past year. Reporters at MarketWatch speculate that both Groupon and Yahoo’s moves represent the trend of “slowing” American pioneers looking to capitalize on their rapidly growing Asian investments as high-speed Internet and global smartphone adoptions have created an increasingly global startup culture in e-commerce.
While the specific terms of the spin-off deal are still in flux, it may include a partnership that allows founder and CEO of Ticket Monster, Daniel Shin, to run the company with private-equity backing. After four straight years of losses, Ticket Monster has been seeking investors as it shifts to direct merchandise sales for Korean customers with smartphones, representing 70-80 percent of total traffic. Seeking new investments are also an attempt to keep up with national rival Coupang, valued at over $2 billion after securing $300 million in capital late last year while avoiding damage to Groupon’s profit margins.
Ticket Mobile was reported to have $1.6 billion in merchandising value at the end of 2014, just shy of Coupang’s $1.8 billion valuation.