In perhaps another desperate act to stay afloat, LivingSocial officially struck a deal today to sell Groupon its subsidiary Korean e-commerce company, Ticket Monster. According to a press release from Groupon, the companies agreed on an aggregate deal of $260 million, which will include "at least $100 million in cash, and up to $160 million in Groupon Class A common stock, with the final cash and stock allocation to be determined upon close."
According to AllThingsD, LivingSocial has been seeking a buyer for its Ticket Monster for more than a month now. While Ticket Monster reportedly is set to generate more than $800 million in billings this year, the company will likely receive a small fraction of that, valued somewhere around the amount of cash LivingSocial will receive from Groupon in this deal.
This is sort of good news for LivingSocial, if you can get past the thick stench of desperation. With this capital, they can work further towards rebranding themselves after an utterly terrible past few months. But the key to this transaction might not be what they did, but whom they did it with. Groupon has long been LivingSocial's main competition. And though LivingSocial hasn't been competing with anyone but themselves as of late, this sale is a total concession to Groupon as the leader of dying daily deals platform, not to mention that the majority of the payment is coming in the form of Groupon stock. Ouch.
If I was Groupon, who today subsequently announced its third quarter success of increasing both revenue and total customer purchases, I wouldn't want anything to do with the failing LivingSocial business plan. But then again, CEO Eric Lefkofsky sees it as an opportunity to scale to the Orient. "Ticket Monster has been successful building a mobile commerce business in one of the largest markets in the world," he said. "It will serve as the cornerstone of our Asian business, bringing scale and ecommerce expertise to that region. Ticket Monster is a great fit for Groupon. The team shares our vision, already leveraging a truly mobile marketplace as well as one that has little reliance on email. Ticket Monster is one of Korea's most recognized and trusted brands, and we're thrilled to have them join the family."
The deal should close sometime in the first half of 2014.
