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Groupon receives a $250 million investment from a Comcast-backed firm

April 4, 2016 03:20 PM
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Groupon Inc. gained a $250 million shot in the arm from a newly formed investment group.

Atairos, founded this year by former Comcast chief financial officer Michael Angelakis with $4 billion in Comcast funds to invest, has bought a stake in the daily deals site. The move comes nearly two months after Alibaba Group Holding Ltd. bought 33 million shares of Groupon, a 5.6% stake. Groupon’s daily deal e-commerce site Groupon Goods is No. 30 in the Internet Retailer 2015 Top 500 Guide.

As part of the deal with Atairos, Groupon will partner with Comcast “to identify and implement potential strategic partnership opportunities,” according to a press release announcing the investment. Atairos CEO Angelakis remains with Comcast as a senior adviser to the executive management committee.

“The potential in combining Groupon's local expertise with Comcast's vast subscriber and advertiser network is something we look forward to closely exploring together,” Comcast Cable CEO Neil Smit says.

“From Atairos’s side, they think that (Groupon) is, frankly, an undervalued company,” says a source close to the situation. “They’re looking to establish a long-term partnership with Groupon. These guys are not short-term investors.”

A Comcast spokesman declined to comment further, and Groupon did not return requests for comment.

The Atairos move has left at least one analyst who covers Groupon baffled.

“For Alibaba, I think they are in the flag-planting mode and they are making investments strategically in e-commerce businesses in the U.S. as a way of learning about the e-commerce market,” says Aaron Turner, an analyst with investment firm Wedbush Securities. “The new one today, I think it’s a little unclear as to the benefit that Atairos gets from this. I don’t think it’s a good strategic fit for Comcast. I highly doubt that they’ll be able to forge any meaningful partnerships from this deal.”

Turner says this investment could be a sign that Groupon is positioning itself for an outright sale.

“I think that Groupon is looking to sell itself and no one has been able to buy it outright and so this is the closest they can get at least right now,” Turner says. “It’s a good way to return cash to shareholders.”

In its Q4 2015 earnings filing, Groupon reported sales grew 2.6% year over year to $3.120 billion from $3.042 billion in 2014. Groupon Goods’ growth of 24.5% far outpaced the company’s overall growth, which includes sales of the vouchers most often associated with Groupon, with Goods revenue of $1.366 billion in 2015 from $1.097 billion the year before.

 

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