Today Groupon announced that its purchase of the Korean ticket and ecommerce company Ticket Monster has closed. A document filed with the SEC states that on “January 2, 2014, the Company and Groupon Trailblazer completed its previously reported acquisition of LS Korea.” As the same filing notes, LS Korea, or LivingSocial Korea, was the holding company for Ticket Monster.
The purchase, worth $260 million, helps Groupon’s international expansion, and could assist it in bolstering its flagging revenue growth rates. In the most recent quarter, Groupon had revenue of $595.1 million, and earnings per share of $0.02.
Ticket Monster could quickly accelerate Groupon’s top line: The business had gross billings on an annual basis of $800 million at the time the acquisition was announced, and 4 million active customers.
As a company, Ticket Monster has seen quick revenue growth, elusive profits, and comes to Groupon with cash and equivalents of a mere $15.1 million. That could explain why LivingSocial was willing to let the business out the door: Given LivingSocial’s own losses, it could be that it lacked the resources to continue to fund the enterprise.
Groupon, on the other hand, is on the cusp of profitability, but has had lackluster revenue growth since its initial public offering. Provided that Ticket Monster’s tangible earnings are not too negative to Groupon’s aggregate non-GAAP income, the fresh revenue could help bring back some of the new parent company’s shine.
Groupon was for a time touted as the fastest growing company of all time. It went public, and watched its stock price fall as profits were scarce, and its famed growth curve flattened.
LivingSocial, a key rival to Groupon, has raised a somewhat incredible $924 million to date. Its struggles in the global market once caused shareholder Amazon to record a $169 million charge. As it appears to constrict its expenses to find profits, its enemy Groupon appears to be a willing assistant, kicking it likely much-needed cash.
Groupon’s cash and equivalents are comfortably over the billion dollar mark, and so it can well afford the purchase.
Investors might not like the dilution that 13.8 million new shares the deal will bring to the company, but if Groupon can begin to grow again like it once did, the naysayers will likely come around.
Top Image Credit: Flickr