Three months after laying off a quarter of its staff, Group Commerce has agreed to merge with its primary competitor, Nimble Commerce, in an all-stock deal, continuing the consolidation among white-label deal companies. Under the terms of the deal, Nimble Commerce CEO Prashant Nedungadi will lead the new firm, which will retain the Nimble Commerce name, and Group Commerce CEO Jonty Kelt will stay on as an adviser and step back from day-to-operations at the company. Financial terms of the deal were not disclosed.
Both companies bet on a similar model, effectively building an advertising network for deals that connected large local publishers with companies like Sweet Jack and Travelzoo that source deals. In a sign of trouble, Tippr, one of the other early competitors in the space, was sold for parts last week to Atlanta-based nCrowd.
The deal effectively puts an end to Group Commerce less than a year after the New York-based startup raised $17 million from a handful of notable investors. The company, which built e-commerce (e.g. deals) platforms for publishers, shut down its local offers business in January after it could not support the cost of retaining a local sales force.
Kelt told Street Fight that the company’s investors, which include Foursquare and Signpost backer Spark Capital, will become shareholders in the new company, but declined to comment on the extent to which the deal would dilute their shares.
The deal, which will push Nimble Commerce into profitability, was mostly focused on scaling the company’s network, says Nedungadi, who will manage the transition from the company’s Santa Clara headquarters over the next few months. The new company will build around Nimble Commerce’s existing technology stack, essentially folding in Group Commerce’s publishers agreements and, for the most part, scraping its product.
Group Commerce, which cut its staff from 109 to 78 in January, could potentially take the brunt of the layoffs, given the nature of the deal. Both executives say that decisions about cuts have not been made yet, but that the company does plan to reduce “redundancies” over the next few months. Nedungadi says that the largest layoffs will likely come in areas like product development where scale does not require additional personnel.
The daily deals market, of course, has taken a hit over the past 12-18 months, but until recently much of the consolidation occurred among the consumer-facing companies. The merger marks a turning point for a model, as local media companies continue to grasp for alternative revenue streams. E-commerce is likely to play a part, but its unclear whether the rapid adoption by local publishers of marketing services businesses will affect the position of offers platforms in the market.
Steven Jacobs is Street Fight’s deputy editor.