FIs Continue Daily Deals Push as Chase Nabs Startup for $35 Million (Jan. 2, 2013)
Jan. 2, 2013
JP Morgan Chase & Co. will pay $35 million to acquire San Francisco-based daily deals startup Bloomspot Inc. in a bid to bolster the local merchant discounts the bank can offer its Chase credit card customers. Bloomspot, which competes with daily Web deals titan Groupon Inc. as well as other city-specific deals services like Living Social, offers consumers coupons for discounts at upmarket merchants, such as high-end restaurants, hotels and spas. Under terms of the acquisition, Bloomspot’s approximately 100 employees will become part of JP Morgan’s Chase credit card unit, according to a memo obtained by Bloomberg News.
According to the memo, which was sent to Bloomspot’s investors by company CEO Jasper Malcolmson, the deal is expected to close by the end of this month, with Bloomspot investors taking a financial hit, earning back only two-thirds of their invested capital. Other daily deals services have suffered similarly in recent months; Groupon’s stock price plummeted by more than 75 percent during 2012, while Living Social has announced plans to downsize.
Still, such services remain attractive to many financial services and credit card companies, who view offering daily deals as an effective method of earning and maintaining cardholder loyalty through card-linked local merchant discounts. In 2012, Bank of America began offering its cardholders cash-back deals for shopping at merchants, including Aeropostale and The Body Shop. American Express, meanwhile, joined with mobile location app maker Foursquare Labs Inc. to offer deals for stores at which its cardholders had checked in using the app. And last February, JP Morgan Chase made an investment into GoPago, a mobile payments and loyalty rewards provider.