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An insider’s view on tech M&A transactions and trends, Inorganic Growth covers the numbers as well as the story behind them. Brenon Daly is the primary writer, with insights from across 451 Research. Hundreds of more in-depth M&A analysis reports and data can be found in 451 Research's... More
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  • In A Shift, Groupon Using Cash In Its Acquisitions 0 comments
    Jan 13, 2014 5:36 PM | about stocks: GRPN

    By Scott Denne

    Apparently more confident in its financial footing, Groupon (NASDAQ:GRPN) is moving away from pure stock to using more cash in its acquisitions. The company's $43m purchase of flash-sales site ideeli, announced today, follows its November pickup of TicketMonster as its largest cash outlays for acquisitions to date. The shift in preferred deal consideration comes as Groupon's losses are diminishing.

    While its spending on ideeli isn't going to dent Groupon's roughly $1bn in cash that it built up mainly from its IPO and substantial venture funding, the transaction is yet another departure from the company's past deals, which were paid for mainly in stock. The purchase follows the $260m - including $100m of cash - acquisition of TicketMonster in November. For comparison, Groupon spent only $61m of cash on its previous 33 deals (and in 2010 it actually added $3m in cash to its books through dealmaking).

    Like TicketMonster , the purchase of ideeli subtracts from Groupon's bottom line but adds to its top. The target generated $115m in sales in its fiscal 2013, which ended in February, and recorded a $30m operating loss.

    The change in preferred deal consideration comes as Groupon's losses continue to shrink, now coming in below $100m over the past 12 months. While that's not a historic low, it's less than half what it posted in its first year as a public company.

    For more real-time information on tech M&A, follow us on Twitter @451TechMnA.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: GRPN
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