Groupon (GRPN) Announces $360M Sale of Ticket Monster Stake; Approves New $300M Common Buyback Plan
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Groupon (NASDAQ: GRPN) has entered an agreement to sell a controlling 46 percent fully diluted stake in Ticket Monster (TMON), its South Korean e-commerce business, for $360 million, to a partnership formed by leading global investment firm KKR and Hong Kong-based Anchor Equity Partners. The investments value Ticket Monster at $782 million on a fully diluted basis, assuming a full vesting of management’s 13 percent stake. At closing, Groupon will retain a fully diluted 41 percent stake in TMON.
The gain on the sale is expected to be between $195 million and $205 million on a pre-tax basis and will be recorded at the close of the transaction. Per the agreement, Groupon will receive $285 million in cash, with the remainder paid to TMON. Groupon acquired TMON in January 2014 for $260 million.
“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,” said Groupon CEO Eric Lefkofsky. “We look forward to watching TMON’s success as a continued large shareholder in the company.”
The TMON sale is expected to close in the second quarter of 2015, subject to regulatory and customary closing conditions. Groupon intends to use the proceeds from the sale for general corporate purposes and share repurchases.
TMON will be treated as a discontinued operation for purposes of financial reporting, effective in the first quarter of 2015. Accordingly, Groupon has recast its guidance for the first quarter and full year of 2015. Reflecting the TMON sale, as well as changes in foreign exchange rates, Groupon now expects first quarter 2015 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 continues to expect adjusted EBITDA of greater than $315 million. This recast guidance is based on preliminary estimates and is subject to change.
Groupon will report results for its 2015 first quarter on May 5, 2015.
The company also announced its Board of Directors has approved a new $300 million share repurchase program, subject to the closing of the TMON sale. The authorization includes the flexibility for accelerated repurchases and purchases over time in the open market in accordance with our current practice. The new plan is expected to commence with the closing of the TMON sale and will run through August of 2017. Groupon expects to continue repurchases under its existing $300 million share repurchase program approved in 2013. That program had $83 million of authorized repurchases remaining as of March 31, 2015, and is set to expire in August of 2015. Share repurchases are subject to market conditions and other factors.
Further details about the transaction and share repurchase program can be found in Groupon’s Form 8-K, filed today with the SEC, as well as on slides posted to the company's Investor Relations website.
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