Social Commerce M&A
Korea’s second-largest social commerce provider Ticket Monster (TMon) will be handed over to the world’s biggest player Groupon. TMon said on November 8 it signed an M&A deal to hand over 100 percent of Tmon’s shares to Groupon, which will change the Korean social commerce player’s ownership once again in two years, after an acquisition deal with the US 2nd largest social commerce provider LivingSocial in 2011.
TMon was established in 2010 as the first Korean social commerce provider. LivingSocial acquired TMon with more than US$100 million in cash and stocks in 2011. However, the cash-strapped company was reportedly forced to sell the Korean company to focus on its business on its home turf.
Groupon CEO Eric Lefcofski, during the announcement of its third quarter earnings on the previous day (November 7), unveiled that the company agreed to buy TMon for US$260 million to expand its presence in the Asian mobile commerce market.
There are, however, many skeptical opinions about whether or not the merge could indeed create synergy by keeping the same brand, while TMon sells similar products to those of Groupon.
To the contrary, some see that the merged TMon-Groupon will become a “dinosaur” in the social commerce industry. Such an angle comes from the assumption that the merge could easily dominate the market if the product delivery know-how of TMon finds common ground with the strategy centered on the strong regional deal of Groupon, amid abundant capital inflow from Groupon.
The deal will close in the first half of next year, and TMon will be a full subsidiary of Groupon upon approval from the Korean Fair Trade Commission.
After the deal, Ticket Monster will reportedly keep its own brand and staff. The method of operating the two companies and business plan will be revealed in detail when the co-founder and CEO Eric Lefcofski visit Korea on November 12.
The founder of TMon and current CEO Shin Hyun-sung said, “I am very pleased to join in the vision and big business scale of Groupon that has been committed to the evolution for sellers, buyers, and partners as the global representative social commerce corporation,” adding, “We will create a bigger business chance by combining the Internet commerce professionalism obtained from LivingSocial and the global network of Groupon.”
The size of the local social commerce market is expected to reach 4 trillion won (US$3.748 billion) this year. TMon has posted over 900 billion won (US$846 million) in sales in the January-Octoberr period, with their mobile business accounting for more than half of total revenue.