Alibaba gets 5.6pc stake in Groupon

The Pak Banker - - COMPANIES/BOSS -

Alibaba Group Hold­ing Ltd. bought 33 mil­lion shares of Groupon Inc., mak­ing it the fourth-largest share­holder in the on­line deals web­site that has lost 86 per­cent of its value since go­ing pub­lic more than four years ago.

The Chi­nese e-com­merce gi­ant owned 5.6 per­cent of Chicago-based Groupon as of Dec. 31, ac­cord­ing to a reg­u­la­tory fil­ing on Fri­day. Alibaba has also ac­cu­mu­lated stakes in on­line re­tailer Inc., aug­mented-re­al­ity provider Magic Leap Inc. and car-book­ing com­pany Lyft Inc. The pur­chases are part of the Chi­nese com­pany's strat­egy to learn more about the U.S. mar­ket as it ex­pands in­ter­na­tion­ally, said Gil Luria, an an­a­lyst at Wed­bush Se­cu­ri­ties Inc.

"They don't want to have their own op­er­a­tions, so they are in­vest­ing in other com­pa­nies to help them learn and pave the way for more ro­bust ac­tiv­ity down the road," Luria said. A spokesman for Hangzhou, China-based Alibaba de­clined to im­me­di­ately com­ment on the fil­ing. Bill Roberts, a Groupon spokesman, said the com­pany hadn't been aware of Alibaba's stake un­til Fri­day's fil­ing.

"Alibaba has a rep­u­ta­tion as a long-term holder, and we're pleased that they take the same view of Groupon's op­por­tu­nity and ex­e­cu­tion as we do," Roberts said. Alibaba's stake was re­ported hours af­ter Groupon had its best day with in­vestors in more than four years. Groupon surged 29 per­cent to $2.89 at the close Fri­day in New York, the big­gest sin­gle-day in­crease since Nov. 4, 2011 -- the day af­ter its ini­tial pub­lic of­fer­ing at $20 a share.

Groupon on Thurs­day re­ported fourth-quar­ter re­sults that beat an­a­lysts' es­ti­mates, driven by pur­chases in North Amer­ica. The com­pany said profit ex­clud­ing some costs was 4 cents a share, com­pared with the av­er­age an­a­lyst es­ti­mate for a break-even quar­ter.

Hav­ing strug­gled since its IPO to spur growth and prof­its, Groupon re­placed Chief Ex­ec­u­tive Of­fi­cer Eric Le­fkof­sky in Novem­ber. Since Wil­liams took over, he in­creased the mar­ket­ing bud­get in an ef­fort to re­vive and rein­vent the for­mer In­ter­net dar­ling. Wil­liams said his ef­forts are start­ing to bear fruit.

"If we do our jobs re­ally well, we'll beat our plan," CEO Rich Wil­liams said in an in­ter­view. "The re­al­ity is we have a lot of work to do." Even with Fri­day's gains, the shares are down 61 per­cent over the past 12 months. On Bloomberg Tele­vi­sion Fri­day, Wil­liams said his com­pany's stock was un­der­val­ued, but that it wasn't look­ing to make any deals.

"Our fo­cus as a team just isn't on things like ac­qui­si­tions, or be­ing ac­quired," Wil­liams said. "Our fo­cus is on build­ing a great busi­ness." Groupon said ad­justed earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion would be $80 mil­lion to $130 mil­lion in 2016, com­pared with an­a­lysts' pro­jec­tion for $105.1 mil­lion. Rev­enue in the pe­riod rose 3.8 per­cent to $917.2 mil­lion, beat­ing es­ti­mates for $845.9 mil­lion.

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