JPMorgan Chase & Co. agreed to acquire online coupon site Bloomspot Inc. for $35 million to bolster its credit card division, according to a memo obtained by Bloomberg News.
The deal will bring Bloomspot’s technology and about 100 employees into the credit card unit, which plans to expand its local offers business, Bloomspot Chief Executive Officer Jasper Malcolmson said in the memo, which was e-mailed to investors.
Closely held Bloomspot, a rival to Web-coupon leader Groupon Inc., sells online discounts to luxury spas, high-end restaurants and weekend getaways. As demand for Internet coupons has slumped, Groupon’s stock has plummeted 76 percent this year and LivingSocial Inc., the second-biggest provider of online daily deals, has announced plans to cut jobs.
After the sale to JPMorgan, investors in Bloomspot will receive a 67 percent return of invested capital, Malcolmson wrote in the e-mail. The deal is expected to be completed by the end of January.
“While we are disappointed that the deal is not generating a positive return for our investors, given alternatives, we believe this is a good outcome for our equity investors,” Malcolmson wrote.
Bloomspot, based in San Francisco, has raised more than $40 million from investors including venture capital firms True Ventures, Menlo Ventures and Columbia Capital. In August 2011, it received $35 million in financing from several venture firms and $5 million of venture debt from Western Technology Investment, according to a statement last year.
Lily Shen, chief marketing officer at Bloomspot, didn’t respond to a voicemail seeking comment. Paul Hartwick, a spokesman for JPMorgan, declined to comment.
Dow Jones earlier reported the deal.