Social Commerce Move
Online retail and payment industries that combine IT, including social commerce, online shopping, and financial technology (fintech), are rapidly growing. Since social commerce site TMON is being offered for sale, the retail industry is paying a lot of attention to who will take over the company.
If an existing social commerce company acquires TMON, the company will become the largest social commerce firm in the nation. With foreign e-commerce retailers such as Alibaba and Amazon augmenting their influence around the world, the industry is paying attention to whether or not local social commerce companies could compete on equal terms with global companies by increasing their size through M&A deals.
According to industry sources on Jan. 1, 10 private equity firms both at home and abroad participated in the preliminary bidding for the sale of TMON. Competition for bidding is expected to swing into high gear. A preferred bidder will be selected in a month, and the acquisition is likely to be finalized within two months at the latest.
TMON is expected to sell a 20 to 51 percent stake. The company will not hand over its management rights, and Groupon will maintain its position as the largest shareholder of the firm. Instead, new shareholders will be given various kinds of merits.
After being established with just 5 million won (US$4,530), TMON gradually increased its size. In August 2011, US-based social commerce company LivingSocial purchased the Korean firm for more than 300 billion won (US$272 million). After that, Groupon bought the firm again. The world's largest social commerce site has selected Deutsche Bank as an organizer to sell some of TMON's stake and attract investment as a result.
As Wemakeprice has officially announced its intent to buy an ownership stake in its rival company, much attention is being paid to how Wemakeprice's move will affect the acquisition in the future.
In fact, Wemakeprice has been secretly discussing the purchase of an ownership stake in TMON with Groupon. About a month ago, the U.S. firm rejected Wemakeprice's offer.
“We are willing to acquire TMON, and delivered our intention to consider the issue more seriously,” said Wemakeprice in a statement released on Dec. 31, 2014. Wemakeprice, which also took part in the preliminary bidding, stressed that its purchase of TMON will create synergy.
“Soon, Korean companies will have to compete with global shopping channels like Amazon and Alibaba. So, we were convinced that we should become a leader of the Korean online commerce industry as soon as possible, to be a winner in a global competitive system and contribute to the national economy,” explained Wemakeprice in the statement, adding, “However, we haven't decided on the details of our plan yet.”
Related to this issue, the industry is keeping a close watch on whether or not Wemakeprice's move will result in an M&A deal in the social commerce industry.
Some point out that it is difficult to predict how much Wemakeprice's influence will increase after it purchases some of TMON's stake, since Groupon previously emphasized that it will continue to be the largest shareholder. However, many in the industry are paying attention to synergy between Groupon and Wemakeprice.