Groupon Inc (GRPN) Acquires Ideeli To Enhance Fashion Presence

Groupon Inc (GRPN) Acquires Ideeli To Enhance Fashion Presence

Groupon Inc (NASDAQ:GRPN) announced the acquisition of the leading online flash fashion retailer, Ideeli for $43 million in cash.

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The acquisition would further extend Groupon Inc (NASDAQ:GRPN)’s presence in fashion and apparel.

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Groupon in acquisition mode

According to Ingrid Lunden of Techcrunch, today’s announcement underscores Groupon’s current acquisition and push to expand into new product categories.

The acquisition is both a product / customer and technology play, with Groupon continuing to run Ideeli’s business and also using its mobile expertise, possibly to expand into other flash sales categories.

Recently Groupon Inc (NASDAQ:GRPN) closed the acquisition of Ticket Monster sooner than expected. Ticket Monster is a leading Korean e-commerce company with over $800 million in annual billings, 4 million active customers, with 50% of its transactions coming from mobile devices.

$40 billion off-price fashion market

In its 8-K report filing, citing research estimates, Groupon Inc (NASDAQ:GRPN) points out that the off-price fashion-market is around $40 billion today, including both online and offline retailers. Groupon believes Ideeli is well-positioned in the online fashion segment of that market, as one of the leading independent fashion flash sites in the U.S. today.

For the fiscal year ended February 2, 2013, Ideeli had $115 million in revenue, a $30 million operating loss, and a $27 million adjusted EBITDA loss.

As Groupon doesn’t have a significant presence in the fashion market today, it doesn’t currently anticipate material cost synergies.

Acquisition to aid Groupon’s mobile presence

Ideeli provides its millions of members with discounted women’s and men’s apparel and home décor. The acquisition should fit with Groupon’s effort to create a new line of business like its ‘Goods’ unit, which sells discounted merchandise. Ideeli’s mobile presence and experience in flash selling should also assist in Groupon Inc (NASDAQ:GRPN)’s work to build up its mobile presence.

Groupon Inc (NASDAQ:GRPN) is still revamping its business of emailed daily coupons into one focused on longer-term deals and closer relationships with merchants for new services such as restaurant reservations. Customers had turned away from Groupon Inc (NASDAQ:GRPN) and LivingSocial as discounts overwhelmed their email inboxes.

The daily deals company acquired Side Tour, an online marketplace engaged in booking and hosting curated local events that offers unique experiences and it operated in Chicago, New York, Philadelphia and Washington, D.C.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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