Chicago – Amidst rumors that have been doing the rounds, Groupon Inc (NASDAQ:GRPN) finally has taken a resolve to sell off the stake of Ticket Monster. It is a South Korea-based e-commerce entity, which GRPN had been controlling for long. As per the move taken, the stake would be sold off to KKR & Co. L.P. (NYSE:KKR) and another Hong Kong-based company called Anchor Equity Partners.
GRPN’s 46% stake shall be sold off at $360 million. Based on the pre-tax, the company expects to garner $195 to $205 million. GRPN had been eyeing entities to sell off its Ticket Monster stake, since 2014. Early in January 2014, the company had purchased Ticket Monster for a humongous $260 million.
Sell Off Makes Sense
On a diluted basis, Ticket Monster is valued at $782 million; the GRPN’s deal shall close in Q22015. The company is keen on keeping 41% stake in Ticket Monster. Investment researchers like analyst Steve Weinstein from ITG Investment Research commented that this business would have required an exquisite amount of investment. Hence, the stake sell off makes sense.
Mobilizing Profits— A Priority
Keeping around 41% stake is a strategic move, as GRPN will incidentally get Ticket Monster off its account books. However, the company would manage some profits from the percentage of stakes in it. GRPN has corroborated that it shall use the sales proceeds of the Ticket Monster stakes sold for share repurchases. A $300 million innovative share repurchase program is on the cards, one the Ticket Monster stake sale closes.
CEO’s Words
As per the SEC filing, if this transaction doesn’t close by July 31, 2015 further extension of 60 days may be granted by Korean Fair Trade Commission. CEO of GRPN, Eric Lefkofsky stated that as a major stakeholder, he would be delighted to see the Ticket Monster make soaring profits.
