Groupon Grabbing Up LivingSocial

Two sites that were once competitors will now become one.  Groupon has agreed to acquire D.C. based daily deals site LivingSocial.

Groupon broke the news during their Q3 earnings call — they are in the process of entering an agreement to acquire all of the outstanding shares of LivingSocial, Inc.  If all goes according to plan, the deal should be done by early November 2016, subject to satisfaction of customary closing conditions. Terms of the deal were not disclosed, but Groupon did say that “the acquisition consideration is not material.”

Groupon’s various trials and tribulations with the rise and fall of the flash sale trend have been very public — but LivingSocial has had a tougher road to hoe thus far.  The firm has raised nearly a billion dollars over 9 rounds of funding and saw its valuation peak at $4.5 billion. More recently, however, LivingSocial has struggled to evolve its business model from its daily deals beginnings and laid off 50 percent of its workforce earlier this year. Groupon moved quickly toward an IPO — whereas LivingSocial remained private (despite some rumors in 2011 of a $10-$15 billion IPO).

Groupon, in its last earnings report, posted revenue of $720.5M and earnings of -$0.01 EPS, beating estimates by $10M and earnings-per-share by $0.01.

CEO Rich Williams noted, “Our strategy continues to deliver results with double-digit growth in North American local billings and our highest quarter for customer acquisition in over three years. We are looking forward to a strong finish to the year and further progress on our mission to make Groupon a daily habit for consumers.”

Williams also noted in a call with investors post-release that Groupon will be acquiring approximately 1M unique customers as part of the transaction, as well as the opportunity to add to its merchant volume.

Groupon shares fell 8 percent in after hours trading on the news.


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