Groupon might slim down its business to free up some pocket change as it gears up to expand in the eCommerce marketplace.
The company might divest four of its businesses over the next two years for raising as much as $730 million in cash, Gene Munster, an analyst at Piper Jaffray, told Bloomberg.
The structural changes come at a time when the company’s stock is trading at just a little over a third of its 2011 initial public offering price. The company’s business strategy has moved from email daily deal alerts to head on locking horns with other eCommerce giants like Amazon and eBay.
However, to further raise its game, the company might possibly have to ferret change in its pocket by scrapping some if its recently acquired businesses, which the company invested in after Co-founder Eric Lefkofsky took over the reins as the chief executive officer in 2013.
Selling off the company’s investment in Ticket Monster, which offers eCommerce services and daily deals in the South Korean market might loosen up about $500 million. Whereas, smaller business investments’ might yield $30 million to $100 million, Munster told Bloomberg. Groupon reportedly bought Ticket Monster in 2014 for $260 million from LivingSocial Inc.
“What is safe to say is that Groupon has several stealth assets that are generally under appreciated by investors as far as overall value,” he said.
Reports emerged earlier this month about the company’s plan to sell out part or all of its ownership in Breadcrumb, a business that sells POS hardware businesses.
Ideel and Club Local are the other two businesses, which Groupon might consider selling as it seeks to augment its $1 billion cash pile.
With its vision to expand in the eCommerce space, the company is reportedly testing new products like the Groupon stores, which would allow merchants to post their offerings and a movie download service for its users that would allow movie download using its website.