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”.
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