Groupon is acquiring LivingSocial, the D.C-based daily deals site that was once the Chicago tech pillar's biggest competitor.
During its Q3 earnings report, Groupon [GRPN] revealed that the company is entering into an agreement to acquire all of the outstanding shares of LivingSocial, Inc. The acquisition is expected to close by early November 2016, subject to satisfaction of customary closing conditions. Terms of the deal were not disclosed, but Groupon did say that the "The acquisition consideration is not material."
While Groupon's struggles have been widely covered by the tech media at large, LivingSocial's rise and fall has been arguably even greater. Since launching in 2007, the company has raised $928M across 9 funding rounds and even reached a valuation of $4.5B. In March of this year, the company announced that it was laying off 50% of its workforce as it struggled to evolve its business model beyond that of daily deals.
While Groupon was able to convert its early growth - in 2010, it was the fastest growing company ever, doing more than $500M in revenue and reaching a $1B valuation in just over 16 months - into a successful public offering, LivingSocial remained private, despite rumors in 2011 that it was preparing to file a $10B to $15B IPO.
Over the past year, LivingSocial had pivoted toward a more business-facing service when it hired former eBay executive Gautam Thakar as CEO after the previous CEO, Tim O'Shaughnessy, went to work as president of Graham Holdings. When Thakar joined, financial problems were already apparent, and its event space in Washington D.C. had already closed. Thakar turned the company to tailored, smartphone-enabled discount systems for events and other activities over the coupon emails that had built the company's fortune when it launched in 2007.
In today's earnings report, Groupon posted revenue of $720.5M and earnings of -$0.01 EPS, beating estimates by $10M and earnings-per-share by $0.01. In the earnings release, CEO Rich Williams said, "Our strategy continues to deliver results with double-digit growth in North America local billings and our highest quarter for customer acquisition in over three yearsWe are looking forward to a strong finish to the year and further progress on our mission to make Groupon a daily habit for consumers."
Also, on the Q3 earnings call, Williams said 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.
Shares of GRPN were down around 8 percent in after-hours trading.
(Image via Groupon)
