TECH DEALS: Groupon gets Scooped

Tech Deals is a weekly column covering the latest deals in one of the busiest sectors for M&A. To read previous articles go to our Tech Deals page.

Groupon, Scoopon, swapyourdeals.com.au

The brains behind Scoopon and CatchOfTheDay – brothers Gabby and Hezi Leibovich – can't seem to put a foot wrong at the moment and after selling a substantial stake in the two online retail channels to James Packer in May for around $80 million, the brothers have managed to bring US daily deals heavyweight Groupon to its knees. At the time of the sale the one big unknown hanging over their head was just how the legal dispute with Groupon, over the Groupon.com.au domain name and trademark, was going to pan out. Well the issue has reportedly been resolved with the Leibovich's coming out on top again. The brothers were ahead of the curve from the very start when they registered the domain name in Australia before the US company and also registered Groupon Pty Limited as their business. Groupon, which had to launch in Australia under the name Stardeals.com.au, had tried everything to unsuccessfully force the brothers into relinquishing the name, including the legal action which evidently was not producing the desired result. The brothers were unwilling to play ball unless there was a full and fair offer for the entire Scoopon business, so it's likely that Groupon has given them a substantial payout to win back the domain name and local trademark. Earlier this year Groupon's CEO Andrew Mason said he was willing to pay $US286,000 to the brothers. That offer was rejected so one would assume that the final settlement figure is higher than that.  

Meanwhile, with the Australian online group buying market continuing to soar it was only a matter of time that amid the plethora of deal sites there was eventually going to be a site that lets consumers resell the deals they won't use and buy the vouchers they missed when the deals were originally offered. According to the latest research from analyst firm Telsyte the market has grown from publishing 800 deals a month at the end of 2010, to currently around 4000 deals a month. With over 2.6 million vouchers sold in Q2 2011, swapyourdeals.com, has come into the market to provide the platform for consumers to list their unwanted vouchers and talk to each other to seal the deals. The site doesn't charge users any fee to sell their vouchers and supports deals from group buying sites like Cudo, LivingSocial, StarDeal (Groupon) and Spreets.

Sensis, Yelp

Telstra's directories arm, Sensis, has taken an important step in trying to boost its user numbers as it continues its transition from print to online, signing an exclusive partnership with US online review heavyweight Yelp. The US company operates yelp.com which is essentially a social networking, local search and user review site all rolled into one, Yelp plans to come into Australia later this year and that's were Sensis' sales force will come into play. According to Sensis boss Bruce Akhurst, the partnership will see Yelp integrate Sensis' Yellow Pages local business listing data into the site (Yelp.com.au) and leverage Sensis' local sales force to launch and embed the site. Akhurst has made little secret of the fact that the old way of doing business pretty much has no future so it's up to the internet to come save the day. It is a painful transition, with revenue forecast to fall for the next two financial years, but it's a step in the right direction. However, rising digital usage still needs to be translated into revenue growth and the partnership with Yelp will be handy for Sensis to counter the likes of TrueLocal.com.au and Google. As of June 2011, Yelp has more than 53 million unique visitors worldwide and in excess of 20 million local reviews of businesses posted to the Yelp sites. Those are heavy numbers and with the latest Sensis Social Media research showing that almost two thirds of social network users (63 per cent) read online reviews before they make buying decisions, Akhurst will be confident that the partnership will lead to much heavier traffic.Yelp.com.au is expected to be fully operational by the end of 2011 with Sensis' Yellow Pages media advisors offering Yelp advertising options to customers in 2012.

UXC Group

UXC Group is within touching distance of becoming an out and out tech company with the listed services company finding a buyer for its non-technology focused field services unit. UXC has reached an agreement to sell its Field Solutions Group business to investment and advisory firm Cashel House, with the final deal subject to finance approval. The deal includes all the business and assets of Utility Asset Management, Skilltech Consulting Services, Infrastructure Constructions, UXC Metering and Fieldforce Services. UXC Announced its decision to consolidate its three IT infrastructure units – Integ Group, XSI Data Solutions and UXC Connect – under one banner in January this year and the move has been welcomed by investors and analysts. The sale of Field Solutions will go a long way in letting UXC refocus on its core IT business. Diversifying out of the IT sector to sell renewable energy certificates may have looked like a good idea even until last year but the scrapping of the federal government's Green Start program proved to be the end of that road. The UXC Board hasn't revealed the value of the offer on the table but said that the financial terms are within its expectations.

Quickflix, Netflix

Quickflix Limited is growing from strength to strength since former Telstra man Chris Taylor took over as the CEO and has successfully completed a placement to institutional and sophisticated investors to raise $4.675 million. The placement of 55 million ordinary shares was completed at an issue price of 8.5 cents per share. The raising was undertaken by E.L. & C. Baillieu Stockbroking and Foster Stockbroking. Quickflix which has so far made its money as an online DVD rental provider but is getting into gear when it comes to the online streaming space, and it needs to move fast given that US giant Netflix is reportedly looking to come into Australia over the next 12 months. According to The Australian, Netflix has been in talks with potential partners. Netflix is set to launch in Latin America later this year but has so far not commented on any further expansion plans.  

Local wrap

In other deals in the local tech sector, Sydney-based content platform developer Tiger Spike has completed an $11 million minority equity financing round from global marketing giant Aegis Media. The investment, which gave Aegis an undisclosed minority stake in the Australian company, was the first financing provided to Tigerspike since it was founded in 2003 and the developer's boss Alex Burke said the money would be used to expand the company's Phoenix service delivery platform for websites and phone applications. TigerSpike's clients include Woolworths, Vodafone, Telstra, Diageo, SBS, The Economist, NewsCorp, ResMed and World Wildlife Fund. Meanwhile, unified communications services provider, Generation-e, has purchased the managed services business from Genesis MSP for an undisclosed sum. Elsewhere, New Zealand's Pacific Fibre has hired TE SubCom, a unit of US–based TE Connectivity (formerly known as Tyco Electronics), to build the underwater cable link across the Pacific to the US. The contract is worth as much as $US320 million with TE SubCom charged with building the cable under a five-year warranty following its completion in mid-2013. Pacific Fibre tendered the work in April and received four initial responses before choosing TE Connectivity. However, the deal is conditional on Pacific Fibre locking in the funding for the building of the link.

International wrap

We start with Google which has had a busy week when it comes to M&A. The internet giant has snapped up facial recognition tech outfit Pittsburgh Pattern Recognition (PittPatt). The company took its first steps as a research project at Carnegie Mellon University's Robotics Institute in the 1990s and was subsequently launched in 2004. PittPatt's founders said that the use of object recognition software, which forms the basis of "tagging" is already a part of a number of Google products so joining the giant is a natural progression for the company. Google is also reportedly in talks to buy US wireless chip technology outfit InterDigital, which has a market value of around $3 billion. According to the Wall Street Journal, a successful deal will help Google boost its patent portfolio as it looks to make inroads in the smartphone market. Meanwhile, the paper's All Things Digital blog reports that Google has bought group social-networking site Fridge, which offers a simple group-communication tool with photo-sharing and event-planning features. Elsewhere, the web giant has bought the g.co domain, which will enable it to have a shorter web address for Google products and services. In other news, Research In Motion has acquired Stockholm-based web-based video-editing software company, JayCut, for an undisclosed sum to bolster the multimedia capabilities of its PlayBook tablet.In other news, IPO fever is back with real estate listings site Zillow pricing its IPO at $US20 per share, giving the company a $539 million valuation. Zillow has received a warm welcome with the shares trading around the $US37 a share mark. The site, launched in 2008, currently lists over 100 million US homes, including homes for sale, homes for rent and homes not currently on the market. Elsewhere, Intel has bought chipmaker Fulcrum Microsystems. Financial terms of the deal, which is expected to close in the third quarter of 2011, were not disclosed. Adobe Systems has bought electronic signature developer EchoSign for an undisclosed sum, eyeing its technology for integration with e-document tools.