Groupon sells 46% stake of Ticket Monster for $360M

The Korean e-commerce company will be owned by a partnership between KKR and Anchor Equity Partners

Financial trends and news by Steven Loeb
April 20, 2015
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In January of last year Groupon announced that it had acquired Ticket Monster, a Korean e-commerce company, from LivingSpcial for $260 million in cash and stock. Since then, things haven't been going too well for the company, which has seen its stock dip and its earnings disappoint.

Now it has decided, in an effort to get itself back on the right track, to unload a big chunk of the purchase. Luckily for Groupon, though. it was able to sell at a profit.

The company revealed on Monday that is selling a controlling 46% stake in Ticket Monster to a partnership formed by KKR and Hong Kong-based Anchor Equity Partners for $360 million. Groupon will still own a 41% stake in the company and the remaining 13% will be owned by the management of the partnership.

Of the total sale, Groupon will receive $285 million in cash, with the rest paid to Ticket Monster. The sale is expected to result in a gain of between $195 million and $205 million on a pre-tax basis for Groupon.

Founded in 2010, Ticket MOnster operates a web-based platform for buying and selling products and services online. Once it the deal is completed, Ticket Monster will be worth a total of $782 million. The deal is expected to close in the second quarter of this year, though it will still need to be approved by the Korean Fair Trade Commission, according to a filing with the Securities and Exchange Commission. 

If the deal is not completed by July 31, 2015, the KFTC may also grant a 60-day extension.

Giving up control of the company is what is in best interest, Eric Lefkofsky, CEO of Groupon, said in a statement.

"As the Korean market developed, it became obvious that TMON would benefit from additional resources and local expertise in its drive to be the leading social commerce company in Korea," he said. "We look forward to watching TMON's success as a continued large shareholder in the company."

Talks of Groupon potentially selling off Ticket Monster began in February. After the company gave a forecast for first-quarter results that fell short of Wall Street's expectations, it admitted that it had parties interested in buying the property.

The company had forecasted revenue of $790 to $840 million, which would have represented 13% growth. Analysts had been estimating growth of $856 million, and Groupon itself had set its goal for growth of 15%.

As a result of this news, Groupon also revealed that it has, once again, recast its guidance. With the sale, however, it has actually revised its forecast down further.

It is now expecting first quarter revenue between $720 and $770 million, adjusted EBITDA between $58 and $78 million and non-GAAP earnings per share (from continuing operations) between $0.01 and $0.03. For the full year, Groupon says that it continues to expect adjusted EBITDA of greater than $315 million.

Groupon will report its results for its first quarter of 2015 on May 5th. 

The company's stock is down 39% from the time it bought Ticket Monster; as the time it was selling at $11.82 a share, and the company ended Monday selling at $7.25 a share.

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