Business Combinations and Acquisitions of Noncontrolling Interests

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Business Combinations and Acquisitions of Noncontrolling Interests Disclosure [Text Block]

BUSINESS COMBINATIONS

The Company acquired four businesses during the nine months ended September 30, 2014.  These business combinations were accounted for using the acquisition method, and the results of each of those acquired businesses have been included in the condensed consolidated financial statements beginning on the respective acquisition dates. The fair value of consideration transferred in business combinations is allocated to the tangible and intangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The allocations of the acquisition price for recent acquisitions have been prepared on a preliminary basis, and changes to those allocations may occur as a result of final working capital adjustments and tax return filings. Acquired goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired. The Company paid this premium for a number of reasons, including growing the Company's merchant and customer base, acquiring assembled workforces, expanding its presence in international markets, expanding and advancing its product offerings and enhancing technology capabilities. The goodwill from these business combinations is generally not deductible for tax purposes.

For the three and nine months ended September 30, 2014, $0.7 million and $3.1 million, respectively, of external transaction costs related to business combinations, primarily consisting of legal and advisory fees, are classified within "Acquisition-related (benefit) expense, net" on the condensed consolidated statements of operations.

LivingSocial Korea, Inc.

On January 2, 2014, the Company acquired all of the outstanding equity interests of LivingSocial Korea, Inc., a Korean corporation and holding company of Ticket Monster Inc. ("Ticket Monster"). Ticket Monster is an e-commerce company based in the Republic of Korea that connects merchants to consumers by offering goods and services at a discount. The primary purpose of this acquisition was to grow the Company's merchant and customer base and expand its presence in the Korean e-commerce market. The aggregate acquisition-date fair value of the consideration transferred for the Ticket Monster acquisition totaled $259.4 million, which consisted of the following (in thousands):

Cash	$	96,496
Issuance of 13,825,283 shares of Class A common stock	162,862
Total	$	259,358

The fair value of the Class A Common Stock issued as consideration was measured based on the stock price upon closing of the transaction on January 2, 2014.

The following table summarizes the allocation of the aggregate acquisition price of the Ticket Monster acquisition (in thousands):

Cash and cash equivalents	$	24,768
Accounts receivable	15,832
Deferred income taxes	1,264
Prepaid expenses and other current assets	829
Property, equipment and software	5,944
Goodwill	220,592
Intangible assets:(1)
Subscriber relationships	57,022
Merchant relationships	32,176
Developed technology	571
Trade name	19,325
Other non-current assets	3,033
Total assets acquired	$	381,356
Accounts payable	$	5,951
Accrued merchant and supplier payables	82,934
Accrued expenses	22,700
Other current liabilities	3,482
Deferred income taxes, non-current	1,264
Other non-current liabilities	5,667
Total liabilities assumed	$	121,998
Total acquisition price	$	259,358

(1) The acquired intangible assets have estimated useful lives of between 2 and 5 years.

    Ideeli, Inc.

On January 13, 2014, the Company acquired all of the outstanding equity interests of Ideeli, Inc. (d/b/a "Ideel"), a fashion flash site based in the United States. The primary purpose of this acquisition was to expand and advance the Company's product offerings. The aggregate acquisition-date fair value of the consideration transferred for the Ideel acquisition totaled $42.7 million, which consisted of the following (in thousands):

Cash	$	42,339
Liability for purchase consideration	359
Total	$	42,698

The following table summarizes the allocation of the aggregate acquisition price of the Ideel acquisition (in thousands):

Cash and cash equivalents	$	79
Accounts receivable	988
Deferred income taxes	572
Prepaid expenses and other current assets	22,081
Property, equipment and software	8,173
Goodwill	5,379
Intangible assets:(1)
Subscriber relationships	5,490
Brand relationships	7,100
Trade name	4,500
Deferred income taxes, non-current	7,753
Total assets acquired	$	62,115
Accounts payable	$	1,640
Accrued supplier payables	4,092
Accrued expenses	9,118
Other current liabilities	482
Deferred income taxes, non-current	332
Other non-current liabilities	3,753
Total liabilities assumed	$	19,417
Total acquisition price	$	42,698

(1) The acquired intangible assets have estimated useful lives of between 3 and 5 years.

Other Acquisitions

The Company acquired two other businesses during the nine months ended September 30, 2014. The primary purpose of these acquisitions was to acquire an experienced workforce, expand and advance product offerings and enhance technology capabilities. The aggregate acquisition-date fair value of the consideration transferred for these acquisitions totaled $7.5 million, which consisted of the following (in thousands):

Cash	$	3,477
Contingent consideration	4,006
Total	$	7,483

The following table summarizes the allocation of the aggregate purchase price of these other acquisitions (in thousands):

Net working capital (including acquired cash of $0.2 million)	$	(52	)
Goodwill	6,261
Intangible assets: (1)
Subscriber relationships	560
Brand relationships	579
Developed technology	568
Deferred income taxes, non-current	(433		)
Total acquisition price	$	7,483

(1) Acquired intangible assets have estimated useful lives of between 3 and 5 years.

Pro forma results of operations presented below do not include the results of these other acquisitions because the effects of these acquisitions, individually and in the aggregate, were not material to the Company's condensed consolidated results of operations.

Pro Forma Financial Information

     The following unaudited pro forma information presents the combined operating results of the Company for the three and nine months ended September 30, 2013, as if the Company had acquired Ticket Monster and Ideel as of January 1, 2013 (in thousands). Pro forma results of operations have not been presented for the nine months ended September 30, 2014, because the operating results of Ticket Monster and Ideel from January 1, 2014 through their respective acquisition dates were not material to the Company's consolidated results of operations for the nine months ended September 30, 2014. The underlying pro forma results include the historical financial results of the Company and these two acquired businesses adjusted for depreciation and amortization expense associated with the assets acquired. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of the Company and the acquired entities. Accordingly, these unaudited pro forma results are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisitions had occurred as of January 1, 2013, nor are they indicative of future results of operations.

	Three Months Ended   September 30, 2013			Nine Months Ended   September 30, 2013
Revenue	$	642,645		$	1,949,406
Net loss	(23,004		)	(79,936		)

     The revenue and net loss of Ticket Monster included in our condensed consolidated statements of operations were $42.8 million and $6.4 million for the three months ended September 30, 2014, respectively, and $107.4 million and $30.3 million for the nine months ended September 30, 2014, respectively. The revenue and net loss of Ideel included in our condensed consolidated statements of operations were $20.6 million and $0.5 million for the three months ended September 30, 2014, respectively, and $58.1 million and $3.7 million for the nine months ended September 30, 2014, respectively.