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Groupon (GRPN) to Divest its Indonesian Business to KFIt

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Groupon, Inc.GRPN is divesting yet another of its International businesses. This time its Indonesian business is being acquired by KFit Holdings Pte Ltd, which itself is a one-year old startup. The deal is expected to close by the third-quarter of 2016.

The two companies have refrained from disclosing the details of the deal. But the report stated "The acquisition will see KFit enter the Indonesian market with Groupon Indonesia as a wholly-owned subsidiary of KFit, while Groupon Inc will become a strategic shareholder of KFit."

It does indicate a deeper collaboration between the two companies than what meets the eye. Moreover, Groupon and Joel Neoh (CEO of KFit) also have had some interesting associations in the past. For instance, Neoh had founded a group-buying platform named GroupsMore, which was later acquired by Groupon. Moreover, following that deal, Neoh had taken the helm of Groupon's Asia operations until he started KFit in 2015, as per media reports.

The aforementioned deal also implies that though Groupon will not be involved in the operations of the Indonesia business any more, it will still have a significant stake. We believe that this is a good thing as Indonesia still has a lot of scope for growth given its massive population (fourth largest in the world) and a largely untapped market for e-commerce.

Furthermore, KFit has revealed that it's keeping the business structure of Groupon India intact for now.

After sluggish growth in 2015, Groupon is now undergoing a business transition as it shifts its focus from rapid international expansion to developing local core business while streamlining its international business. Last month, the company divested its Breadcrumb restaurant point-of-sale software business to another startup, Upserve, for a minority stake in the company.

Groupon carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include Internap Corporation INAP , Atlassian Corporation Plc TEAM and Castlight Health, Inc. CSLT , each carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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