LaShou Story Ends With Sale To SanPower
The end has finally come for group buying site LaShou, though this former Internet superstar survived for far longer than I ever imagined it would before its newly announced acquisition by conglomerate SanPower Group, which owns a number of online and offline retail brands. Of course this acquisition doesn’t mean the actual death of LaShou, and it’s quite possible the company could still make a comeback under its new ownership. But its acquisition marks one of the final big consolidation moves for a group buying sector that saw explosive growth 3 years ago, followed by a major correction that saw most companies either close or get acquired.
I’ve had a look at SanPower’s retail portfolio, and based on the few names that I recognize it contains mostly second-tier brands of struggling companies that couldn’t compete like Chinese e-commerce firm Mecox Lane (Nasdaq: MCOX) and faded US chain Brookstone. LaShou definitely fits that profile, and the fact that it couldn’t find a stronger buyer like sector leaders Meituan or restaurant ratings leader Dianping probably reflects the fact that its business is dying and its days are numbered.
All that said, let’s review the latest headlines that are quite brief and simply say that SanPower has agreed to acquire LaShou for unspecified terms. (Chinese article) The last time I wrote about LaShou was more than a year ago, when media were reporting the company began looking for a buyer at the end of 2012 and was in talks with Nuomi, the group buying site that was sold last year by social networking site Renren (NYSE: RENN) to online search leader Baidu (Nasdaq: BIDU). (previous post)
Obviously that deal never happened, and I suspect that LaShou has spent much of the last 2 years knocking on the doors of all the other major remaining group buying sites including Meituan and Dianping. The latest reports say that SanPower wants to combine LaShou with its various retail holdings, which also include Britain’s House of Fraser, to create a diversified online-to-offline shopping experience, commonly called O2O.
This kind of harebrained scheme sounds rather silly to me, as all of SanPower’s retail holdings are small and faded or unknown brands spread across a wide range of geographies. Group buying in China has little in common with the clothing products sold by Mecox Lane, nor with the kitschy knick-knacks sold by Brookstone in the US.
This fate marks a bit of a whimper in the final chapter for LaShou, which was once one of China’s hottest names during the group buying craze that was sparked by US pioneer Groupon (Nasdaq: GRPN). Of the big Chinese group buying sites, LaShou was the only one to ever seriously pursue an IPO, seeking to raise up to $100 million in a 2011 offering. But it had to cut back the size of the plan due to lack of demand and questions about its finances, and ultimately ended up scrapping the deal altogether.
Since that time Meituan and Dianping have emerged as the industry leaders, finally providing investors with some strong options for betting on the sector. In March, media were reporting that Meituan was on the cusp of landing $100 million in new funding in the run-up to an IPO later this year, just around the same time that Dianping sold 20 percent of itself to Internet giant Tencent (HKEx: 700) as it eyed its own IPO. (previous post) I’m feeling just a little sad that I won’t be able to write about LaShou anymore, though I do think its exit was long overdue and the sale to a relatively inexperienced bargain hunter like SanPower is probably a fitting end for this former high-flyer.
Bottom line: LaShou’s sale to SanPower is one of the final major developments in consolidation of China’s group buying sector, which could be followed by IPOs for leaders Meituan and Dianping in the next 12 months.
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