Gilt City acquires BuyWithMe

After running out of money and axing half its workforce, BuyWithMe finds a buyer

Interesting. 

After giving half its workforce the chop amid rumors that BuyWithMe has run out of cash, the daily deals site has evidently just been acquired by Gilt City, Gilt Groupe’s local luxury deals business.   Gilt announced the acquisition Wednesday, confirming rumors that surfaced last week.  The financial terms of the deal were not disclosed, but reports peg the price tag at an astoundingly low $5 million.

It’s been a busy year for BuyWithMe, which swapped out CEOs last December and promptly dove into a buying spree.  The company snapped up six daily deal companies in six months in an attempt to get back into the running with the big dogs, i.e. Groupon and LivingSocial.  While the three companies all started out around the same time (obviously Groupon was the first to plant the group buying flag) and initially took off with the same momentum, BuyWithMe ended up flatlining while Groupon and LivingSocial climbed the charts.

In December, former CEO Cheryl Rosner stepped down after only eight months on the job, and former Turbine CEO Jim Crowley took her place. 

Si x acquisitions later, BuyWithMe reportedly ran out of cash and axed 100 of its 200 employees without warning or anything in the way of severance packages, according to one report.  Naturally, those booted employees were not too happy about the arrangement and had a few choice words for the company.  One commented to DailyDealMedia: “Andrew Moss [founder and Chief Strategy Officer] has no vision and is incapable of innovating.”  Ouch.

Another employee told BetaBeat that the company had been trying to raise a $100 million round for a $500 million valuation, but there were no bites. 

So it looks like BuyWithMe has found itself a buyer.  The terms of the deal were not disclosed, but a Gilt spokesperson says that many of the remaining BuyWithMe employees will remain on board, though the exact number is not being disclosed.

The acquisition will allow Gilt to expand in the ten markets it has already penetrated, as well as several new markets over the course of the next year—thanks to the fact that BuyWithMe has already done all the grunt work.

"This purchase demonstrates Gilt Groupe's commitment to making Gilt City a top player in the local- services industry," said Kevin Ryan, CEO and Founder of Gilt Groupe, in a statement. "BuyWithMe complements our philosophy of providing premium offers to customers at great prices. We are excited to capitalize on this incredible opportunity to grow our lifestyle positioning."

Image source: cartoonstock.com