Groupon to Buy Rival LivingSocial, Shares Drop

Groupon Inc (NASDAQ:GRPN) agreed to buy daily-deals provider LivingSocial, combining the biggest two companies in the industry. Both companies provide “daily deals” with discounts to consumers who want to save money. Groupon declined to disclose the deal value, saying the amount of the purchase wasn’t material.

“Deals happen when they’re available out on the market,” Groupon Chief Executive Rich Williams said in an interview. He added that “the holiday season is a good time to get that done” as shoppers start looking for more goods and activities to buy online.

“This brings together the two pioneering companies in the local space to help merchants grow their business and consumers get great value on local services and activities,” LivingSocial said in a release.

LivingSocial is backed by Amazon. The e-commerce giant invested $175 million in LivingSocial in 2010. LivingSocial was valued at $6 billion in a funding round in 2011, but it only had a valuation of $242 million at the end of 2014.

Groupon is experiencing the same situation. Groupon had a valuation as much as $16.7 billion when it went public in 2011, but now it only had a market cap of 2.33 billion at Thursday’s close. Groupon report a loss of 1 cent a share in the third quarter, excluding some items, met the average of analysts’ estimates. Sales rose 1 percent to $720.5 million, topping analysts’ estimates of $709.1 million. Groupon shares plunged 22 percent to $4.1 at Thursday’s close.

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