Groupon scales back IPO, expects to raise up to $540 million

Groupon Inc. is seeking to raise between $480 million and $540 million in its initial public offering, scaling back its original plans to raise $750 million or more.

In an amended prospectus filed Friday with the Securities and Exchange Commission, the Chicago-based daily deals company said that it would sell 30 million shares of Class A common stock and that it anticipates IPO pricing of between $16 and $18 per share.

Groupon will list on the Nasdaq under the ticker symbol GRPN.

An IPO between $16 and $18 per share would value Groupon between $10.1 billion and $11.4 billion, which is less than half of the initial talk of valuations between $20 billion and $30 billion. Still, the less ambitious valuation is higher than the $6-billion buyout offer from Google that Groupon turned down late last year.

Groupon is planning to sell just under 5% of the company’s total outstanding shares after the offering. The company said this amount is less than what “is typical for an initial public offering” and cautioned that this could result in “significant volatility” in its share price.

The company said it expects its net proceeds from the IPO to be about $478.8 million, using the midpoint figure of $17 per share. This figure deducts commissions to the company’s underwriters and other expenses related to the offering.

Groupon said it does not expect to use any of the IPO proceeds for operations during the next 12 months.

The company first filed documents to go public in June. At that time, the prospectus said it was seeking to raise up to $750 million, a figure understood to be a place holder for calculating registration fees. Analysts had expected the number to go much higher.

However, volatility in global markets thwarted many companies’ plans to go public during the summer. Moreover, Groupon came under fire for a variety of missteps during its pre-IPO process and repeatedly amended its filing documents to restate revenues, reflect changes in accounting and clarify statements made by Chief Executive Andrew Mason in a leaked internal memo.

Analysts also questioned the viability of Groupon’s business model and whether the company could keep up its frenetic pace of growth. The Friday filing was updated with third-quarter financial results and showed that Groupon posted a net loss of $10.6 million in the latest period, narrowing its net loss of $101.2 million in the second quarter and $49 million in the third quarter of 2010.

Groupon’s revenues totaled $430.2 million in the latest period, up from $392.6 million in the second quarter and $81.8 million in the third quarter of 2010. The company calculates its revenues by subtracting merchants’ cut from total sales of Groupon vouchers.

Groupon said it retained less of its coupon sales in the third quarter than the second quarter because it launched several products, including its Groupon Getaways partnership with Expedia and Groupon Live partnering with Live Nation, that have lower margins on deals than the company’s traditional daily deals with local merchants. Groupon said it expects margins in these categories to improve over time.

Total coupon sales topped $1 billion for the first time in the third quarter, coming in at $1.16 billion. They were $929.2 million in the second quarter and $194.3 million in the third quarter of 2010.

Groupon had 142.9 million subscribers at the end of the third quarter, up from 115.7 million in the second quarter. Customers, or those who have purchased a Groupon, totaled 25.9 million, compared with 23 million in the second quarter.

wawong@tribune.com