Struggling Groupon bid £80m for luxury retailer



Groupon (NasdaqGS: GRPN - news) , the struggling US “daily deals” company, offered to buy Achica, the British luxury goods online retailer, in a deal that would have valued the company in the region of £80m.

The unsolicited offer, believed to have been made in the autumn, was turned down, as the founders and shareholders deemed it to undervalue the business.

But the disclosure of the approach reflects Groupon’s desire to widen its business model amid a falling share price and competition from rival websites.

Achica is a members-only site which offers users access to high-end brands at prices discounted by up to 70pc.

It offers customers the chance to take advantage of the reduced prices for a fixed-time window of 48 hours. Groupon which began life offering daily deal vouchers for retailers, hotels, spas and restaurants has begun to move away from the business model since its initial public offering in November (Xetra: A0Z24E - news) 2011.

In the past year it has bought a string of companies, including US restaurant reservations business, Savored, in September, and has said it is working on a mobile payment platform to encourage companies to use its voucher service.

It is thought the speed of Groupon’s acquisitions has in part been driven by chief executive Andrew Mason’s attempt to increase the company’s revenue base amid fierce competition for daily deal products.

Since it floated, Groupon’s share price has fallen by 85pc after repeated profit warnings and after it restated its sales and profits figures in April (Paris: FR0004037125 - news) following an accounting error. The company initially floated with a value of $13bn (£8bn) having turned down a $6bn offer from Google (NasdaqGS: GOOG - news) in 2010 but is now worth less than $3bn.

It is understood that Achica co-founded by Quentin Griffiths, co-founder of ASOS (Other OTC: ASOMY - news) , and Will Cooper was initially approached by Groupon’s in-house merger and acquisitions team.

The US company had two conversations with Achica, during which the £80m offer was proposed, based on two times 2012 estimated sales

of £40m. However, following conversations with the board and shareholders which include Balderton Capital, backer of Wonga and The Hut the approach was rejected.

Achica’s most recent accounts, for the year to December 2011, show a loss before tax of £3.85m on sales of £14.68m.

Achica and Groupon declined to comment.


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