On Wednesday, the company announced that it was purchasing LivingSocial. Groupon said the “amount of the purchase isn’t material,” according to Bloomberg—and the deal should close next month.
Daily deal sites like these were once the darlings of the internet startup landscape. Now, both are struggling—LivingSocial more than Groupon.
"We are happy to have them join us on our mission to build a daily habit in local commerce," Groupon CEO Rich Williams told analysts in a conference call.
Williams said he expects the deal to expand Groupon’s customer base and extend its reach with local businesses.
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Last month, LivingSocial announced layoffs that would affect half of its staff. The company—which once employed more than 4,000 workers and was valued at $6 billion—now employs roughly 200 staffers.
Despite the news, Groupon shares fell more than 20 percent this week.
The Chicago-based business that once famously rejected Google’s offer to purchase it for $5 billion has been trying to pivot. It has begun to move away from the daily deals that made it so popular, and is focusing on more of an online marketplace model.
Just as Groupon has been moving away from its daily-deal roots, converting itself into an online marketplace, LivingSocial had turned to a strategy involving credit-card discounts at restaurants. The acquisition will be a good fit because it will expand Groupon’s customer base and because LivingSocial also provided deals for local businesses, Groupon Chief Executive Officer Rich Williams said.
Groupon also announced that it would be exiting 11 countries, focusing its effort on its remaining 15 presences.
What do you think, PR Daily readers? Will the move help Groupon capture consumers?
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