Groupon Eyes European Expansion, Buys CityDeal

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Chicago-based Groupon has set its sights on Europe, buying the popular CityDeal upstart that's accrued a million subscribers for its daily deals e-mails in just five months of existence. Financial terms of the deal were not disclosed.

The acquisition comes on the heels of Groupon picking up $135 million in funding last month. By purchasing the Berlin-based City Deal Gmbh, Groupon's operations will profoundly grow in terms of office locations and employees.

Groupon will go from doing business in two countries (the U.S. and Canada) to 18 countries, including Germany, United Kingdom, Ireland, France, the Netherlands, Spain, Italy, Switzerland, Austria, Poland, Finland, Denmark, Turkey, and Sweden. Its presence will increase from 50 to 140 cities, and its employee numbers will triple - from 300 to 900.

With a more streamlined business plan than CityDeal, the 19-month-old Groupon has been able to attract 5X as many subscribers (5 million). When asked about the two different operational philosophies coming together, Julie Mossler, Groupon spokesperson said, "At the moment, we have no plans to downsize or consolidate."

In the coming months, Groupon will fold the CityDeal brand into its own. "Users of CityDeal will be informed of the name change, as it will be a gradual transition over the next few months," Mossler said. "We don't have any ad plans we wish to disclose."

While Groupon remains tight-lipped on its ad strategy in Europe, it seems reasonable to expect the brand to use strategies that have apparently worked well for it in North America - search marketing and Facebook.com ads. The company typically competes in those ad venues with brands like Living Social, OfferMint, Yipit, and Schnoop.

Along with Groupon, those so-called social commerce brands generally use collective buying power to land and resell sizable discounts/coupons for trendy restaurants, entertainment events, and various other kinds of consumer offers like beauty spas.

According to a recent TechCrunch post, Groupon is generating profit of at least $1 million per week and will hit $350 million in revenue this year. If it remains independent and continues to grow at such a rapid pace, chatter about an IPO may not be far off.

Follow Christopher Heine on Twitter at @ChrisClickZ.