Anchor Equity Partners, KKR To Buy Controlling Stake In Groupon's Ticket Monster

(RTTNews) - Private equity investor Anchor Equity Partners and global investment firm KKR agreed to acquire a controlling stake in South Korean mobile commerce company Ticket Monster Inc. or "TMON" from Groupon Inc. (GRPN).

Anchor and KKR, in conjunction with TMON's management, will jointly acquire a controlling stake in TMON and will inject new capital into the company to help fund its future growth opportunities. Anchor and KKR will hold equal stakes in the company.

Some of the world's largest pension, sovereign wealth funds and institutional investors, including the Canada Pension Plan Investment Board and Pavilion Capital, will also be participating as investors in this transaction.

Groupon will retain a fully diluted 41% minority stake in the company. The investment is based on a $782 million fully diluted valuation of TMON.

KKR and Anchor will work closely with TMON's co-founder and CEO Dan Shin and the management team to grow the business.

The transaction is expected to close in the second quarter of 2015, subject to regulatory and customary closing conditions.

Ticket Monster Inc. was founded in 2010. In 2014, 70% of TMON's transactions were completed on mobile devices and its customer base continued to expand into multiple age segments. The company operates in three key verticals - Goods, Local and Travel - and offers over 47,000 SKUs through partnerships with approximately 15,000 merchants.

Separately, Groupon confirmed it has entered an agreement to sell a controlling 46 percent fully diluted stake in Ticket Monster, 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.

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. Analysts polled by Thomson Reuters expect the company to report earnings of $0.01 per share and revenues of $822.45 million for the first-quarter. Analysts' estimates typically exclude special items.

Groupon noted that it will report results for its 2015 first quarter on May 5, 2015.

Groupon also announced its Board has approved a new $300 million share repurchase program, subject to the closing of the TMON sale. 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.