Groupon Inc. (GRPN), the biggest daily coupon website, is combining its Gaopeng online-commerce venture in China with FTuan, a company backed by local partner Tencent Holdings Ltd. (700)
Gaopeng, in which Chicago-based Groupon owns a minority stake, will continue to offer its own brand alongside FTuan after the merger, according to a statement from Groupon and Tencent yesterday. The transaction with FTuan, which provides consumers low-priced deals for dining and purchases, is part of Groupon's strategy to "strengthen" its investment in China, Groupon said. Terms weren't disclosed.
The deal comes more than 16 months after Groupon started Gaopeng with Tencent and Alibaba Group Holding Ltd. Chairman Jack Ma's Yunfeng Capital, entering the world's fastest-growing major economy to offer deals on apparel and travel packages. Tencent, China's biggest Internet company, said last month it will invest $1 billion in its e-commerce unit.
Groupon faced setbacks in the country last year, when it fired workers for poor performance, a person with knowledge of the matter said at the time. Former and current employees of Gaopeng said the joint venture closed more than 10 offices in the country, and a lawyer representing former Gaopeng employees estimated that about 400 people were fired, according to the Wall Street Journal.
China's online group-buying market generated estimated revenue of 4.3 billion yuan ($676 million) last year, more than doubling from 1.5 billion yuan in 2010, according to research company iResearch.
FTuan, based in Beijing, attracted about $30 million of investment from Tencent in March 2011, it said in April. A further $60 million was raised in September 2011 from several investors including Tencent, according to FTuan.