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Investment  3, Jan 2014

Groupon completes US$260M acquisition of LivingSocial’s TicketMonster

Groupon has completed the acquisition of the Seoul-based daily deals website with US$100M in cash and US$160M in Groupon Class A common stock

Groupon has completed the acquisition of TicketMonster, the Seoul-based daily deals website, with US$100M in cash and US$160M in Groupon Class A common stock, subject to registration rights.

Groupon had announced the acquisition of LivingSocial Korea (LS), the holding company of TicketMonster, in November, last year. The acquisition however did not include LS’ Malaysian subsdiary Everyday.

Upon acquisition, LivingSocial Korea had gross billings of US$572.7 million, revenue of US$78.5 million, an operating loss of US$38.7 million, and Adjusted EBITDA of US$0.7 million during nine months ended September 30, 2013. The numbers are excluding its Malaysian subsidiary and are calculated based on US-GAAP (Generally Accepted Accounting Principles). However, in spite of LivingSocial Korea’s losses, Groupon is optimistic about working with TicketMonster to strengthen the business.

But how come? According to Groupon, of the US$ 38.7 million operating loss, $25.9 million is stock-based compensation, and $13.5 million is depreciation and amortization. Both of these non-cash items are excluded in Groupon’s calculation of Adjusted EBITDA. Excluding these items, LivingSocial Korea’s Adjusted EBITDA was close to breakeven.

From here, Groupon has faith that TicketMonster is still having a great positioning in daily deal market in Korea.

TicketMonster, the leading daily deal website based in Seoul, is now offering approximately 65 per cent goods, 20-25 per cent locals, and the remainder is travel.

Completing the acquisition, TicketMonster brand and leadership team will remain in place and continue to be led by Daniel Shin, CEO of Ticket Monster. The company will maintain its headquarters in Seoul, where it employs approximately 1,000 employees. We can expect retrenchment, however, Groupon “is confident” that it will “”retain the key talents”.

Read also: Groupon.co.in turns 1; But where have other deals’ sites vanished?

Christine Siagian

Christine Siagian

Christine is a life-long digital learner: she spends most of her day and night getting to understand all things about internet! Based in Jakarta, Indonesia, she is interested in research, big data, digital start-up, technology, and entrepreneurship. If she is not working with data, you can find her running on treadmill, on the road, or in the hills. Currently training for ultra marathon this year.

  • Andrew

    This is a case of Groupon buying revenue and expecting sales to grow as they cut staff and kill morale. And it’s adjusted ebitda is rubbish. Stock was used to retain the best staff and cutting it will dis-incentivize “key talents”. Depreciation represents the write down of investments, which will continue even if you must invest to integrate the old biz onto the global platform. There is nothing proprietary about the Groupon business model. It’s not scalable globally and they’ve paid a massive premium for a mature business with low growth prospects.

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