Groupon crosses Atlantic, buys Euro 'clone'
The daily-deal site pioneer acquires CityDeal, a European version of itself, bringing its operation to 18 countries and 140 cities.
One way to deal with all of those pesky competitors in the online daily-deals market is to buy them. And likewise, one way to expand overseas is to acquire the European version of yourself.
Both apparently made sense to Groupon, which announced Sunday that it has acquired European-based CityDeal, "the world's largest Groupon clone," as it was described in a press release.
"That means we're operating in 18 countries, 140 cities, and we have over 900 employees in about a dozen offices across two continents," Groupon founder and CEO Andrew Mason, said in a blog post. "Not bad for 19 months' work!"
Launched in November 2008, the Chicago-based Groupon, a pioneer and market leader in the "social buying" niche, advertises a deal each day from a selected local establishment like a restaurant, nail salon, or gym. There's a heavy discount involved, but enough members have to opt into the deal in order for any of them to get it. Groupon takes a cut of earnings if the deal hits the "tipping point" and goes live; otherwise, the featured merchant does not have to pay.
Despite its increasing pool of imitators, Groupon said it has been profitable for a year and raised a $30 million Series B round at the end of December.
CityDeal, operating in more than 80 markets in 16 countries, was founded in November 2009 by a group of European entrepreneurs, including the three Samwer brothers who founded what became eBay Europe. The site launched out of Berlin, but has since opened offices in the U.K., France, Spain, and Italy, among others countries, Groupon said.
Mason said Groupon knew European expansion wasn't going to be easy. "Just adapting Groupon to suit the differences between Miami and Philadelphia is enough of a challenge that we knew we wouldn't be able to succeed in Europe without amazing entrepreneurs with an intimate understanding of the local cultures," he said.
So the company started meeting with the "horde" of European Groupon imitators and found CityDeal as the clear standout, Mason said.
The terms of the deal were not disclosed. In coming months, CityDeal will transition over to the Groupon brand name and site design.
CNET's Caroline McCarthy contributed to this report.