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Groupon's Ideeli Acquisition Could Spell Trouble for Overstock, Others

Groupon's Ideeli Acquisition Could Spell Trouble for Overstock, Others

Groupon (NASDAQ: GRPN) announced this week it had acquired Ideeli, an online flash fashion retailer.

The daily deals site paid $43 million for the company. That may be a bit more than some of its earlier acquisitions, but is considerably cheaper than the $260 million that Groupon paid for Ticket Monster.

Wunderlich Securities analyst Blake T. Harper thinks the Ideeli acquisition is another way for Groupon to expand its goods business.

"It expands the goods business into a new category," Harper told Benzinga. "It's really fashion and apparel, so they have relationships and merchandise and a customer base that kind of fills the whole [fashion] goods business that they didn't have before."

"They are moving more toward e-commerce," he added. "They are emphasizing their goods business to be more like an Amazon (NASDAQ: AMZN) or Overstock (NASDAQ: OSTK)."

Regardless, said Harper, investors shouldn't expect Groupon to make a dent in Amazon's business model.

"It'll be more competitive for other flash sales sites," he noted, "and Overstock with having some of these flash sales sites being consolidated into larger e-commerce businesses, rather than these smaller, standalone startups."

Related: Groupon Named Top Mid-Cap Pick for 2014 by Northland Capital

Looking to future acquisitions, Harper expects Groupon to acquire additional firms in the goods space.

"Another would be expanding their travel business," he said. "Any type of startup that could expand the travel segment. And then other things focused on technology-based stuff, whether it's mobile payments or anything mobile related. And then also other acquisitions that could fill in geographic areas or fill in areas internationally, such as what they did with Ticket Monster in South Korea."

In September Groupon acquired SideTour, a startup that invites consumers to "do something memorable." Groupon hopes to use the company's resources to boost its local activities business.

The daily deals giant also acquired Blink last fall, a last-minute travel app geared at the European market.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Posted-In: Blake T. Harper Blink commentsAnalyst Color News M&A Analyst Ratings Tech Best of Benzinga


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