Groupon Acquires Once-Valuable LivingSocial Site

Like its users, Groupon apparently can spot a bargain when it sees one. The daily deal site, which has recently transformed itself into an e-Commerce marketplace, will purchase rival LivingSocial. LivingSocial was once valued at $6 billion, but the purchase price now is low enough to be considered “not material,” according to Groupon’s Q3 financial report. The deal is expected to close by early November 2016.

Both Groupon and Living Social have struggled in recent years as the once-hot craze for daily deals has faded. Groupon had been valued at more than $16 billion when it went public in 2011, according to Bloomberg, but its most recent market capitalization was slightly more than $3 billion.

Groupon has been streamlining, cutting jobs and narrowing its international reach. The brand plans to leave 11 countries and focus on a total of 15. Q3 revenue was $720.5 million, up from $713.6 million during the same period last year. While North America revenue increased 4%, EMEA revenue declined by 1% and revenues from the rest of the world dropped even more precipitously, by 19%.


Groupon CEO Rich Williams has worked to increase Groupon’s marketing budget, particularly in North America, and those efforts have helped the company acquire 1.2 million active customers in the region during Q3.

“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 years,” said Groupon CEO Rich Williams in a statement. “We are looking forward to a strong finish to the year and further progress on our mission to make Groupon a daily habit for consumers.”

Living Social, which is partly owned by Amazon, laid off half its employees in March 2016. Amazon had invested $17.5 million in LivingSocial in 2010, but in Q3 of 2012 Amazon took a $169 million charge due to the company’s declining value.

Both companies have moved away from their daily deal/flash sale roots, restyling themselves as online marketplaces. LivingSocial has moved further into offering credit card discounts at restaurants. The acquisition will be a good fit because it will expand Groupon’s customer base, and because LivingSocial also provides deals for local businesses, according to the Bloomberg report.

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