February 26, 2024

DealBook: Groupon Back on Track for Its I.P.O.

Andrew Mason, Groupon's chief executive.Seongjoon Cho/Bloomberg NewsA memo from Andrew Mason, Groupon’s chief executive, contributed to a delay in the company’s initial public offering.

Groupon is planning to put its initial public offering back on track even as markets remain rocky.

After postponing presentations to potential investors early this month, the online coupon giant is now aiming to go public in late October or early November, according to people briefed on the matter. That would mean that Groupon could embark on its investor roadshow by the middle of next month, these people said.

The restart on the I.P.O. process is being driven in part by a resolution between the company and the Securities and Exchange Commission over a memo from Groupon’s chief executive to employees that promoted the company’s business performance, the people said. The memo soon became public, raising concerns that the company had violated S.E.C. rules restricting corporate information before an offering to its prospectus.

But the biggest reason for the changes in Groupon’s timing has been the volatility in stocks in recent weeks. While the company now appears to feel more confident about going forward with an offering, another round of market gyrations could again delay its roadshow and stock sale, said the people briefed on the matter, who were not authorized to speak publicly.

Already a number of companies have chosen to delay their offerings given the current market, including the International Automotive Components Group, a car parts maker controlled by the billionaire investor Wilbur L. Ross.

Other companies’ plans remain in flux. Facebook, the social networking giant, whose potential for a public offering is the stuff of breathless speculation, has yet to nail down a plan. The company is still planning to go public in the first half of next year, people close to the matter said on Wednesday, even as The Financial Times reported that the offering will most likely be pushed to late 2012.

Swings in the market endanger the stable pricing that companies and their bankers look for to reap the highest proceeds from their stock sales. Coupled with a broader slump in the market — the Standard Poor’s 500-stock index has fallen 7.7 percent over the past three months — the landscape has become much tougher for equity offerings.

Already this year, companies that began their newly public lives buoyed by investor interest have since seen their stock gains fade. Shares of Renren, a Chinese social networking company, have fallen 52 percent below their $14 offer price. And shares of Demand Media, a big online content producer, have slipped 55 percent below their $17 offer price.

Of the 97 companies that have gone public in the United States this year, 64 percent of them now trade below their offer price, according to data from Thomson Reuters.

Still, Groupon has overcome one potential hurdle to its I.P.O. The leaked memo from its chief executive, Andrew Mason, had threatened to complicate the company’s discussions with the S.E.C. over its prospectus.

The questions about the leaked internal memo arose during the S.E.C.’s review of the Groupon prospectus. The agency regularly oversees the filings of companies seeking to go public, seeking to prevent improper stock promoting. The S.E.C. had previously expressed concerns about a pro forma accounting measure Groupon had presented in an earlier version of its prospectus. After questions about whether the metric misleadingly showed Groupon to be profitable, the company removed references to it in a revised securities filing.

The incident over the leaked memo was somewhat similar to one in 2004 involving Google, which appeared to violate S.E.C. quiet-period rules before its I.P.O. when its founders, Larry Page and Sergey Brin, gave an interview to Playboy magazine. And the possible solution may be similar as well: Groupon could file another revision to its prospectus, which would include at least parts of Mr. Mason’s memo and additional details that support its assertions. Those could include some August performance figures. (Google was required to amend its prospectus to include the magazine interview.)

Less than three years old, Groupon has become one of the darlings of the new generation of Internet companies, and its initial offering is almost as eagerly awaited as that of Facebook. The company, which signs up local merchants to offer daily deals, has reported eye-popping growth in its revenue and subscriber rolls.

That has pushed its valuation ever higher, with some people close to the company estimating that it could fetch $25 billion to $30 billion in the I.P.O.

At the same time, the company has come under fire from some retailers and analysts who are skeptical about its ability to sustain its growth rate. Groupon’s growth has slowed in recent months as the company has gotten bigger,

But Groupon still reported enviable results in its second quarter, including a 36 percent gain in net revenue, to $878 million.

Article source: http://feeds.nytimes.com/click.phdo?i=661471bf8243690d3868a8ddba86c5fe

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