Dec. 20 (Bloomberg) -- JPMorgan Chase & Co. agreed to acquire online coupon site Bloomspot Inc. for $35 million as it seeks to offer credit card holders more discounts to local shops, according to a memo obtained by Bloomberg News.
The deal will bring Bloomspot’s technology and about 100 employees into the credit card unit, Bloomspot Chief Executive Officer Jasper Malcolmson said in the memo, which was e-mailed to investors. Closely held Bloomspot, which competes with Web-coupon leader Groupon Inc., sells online discounts to luxury spas, high-end restaurants and weekend getaways.
JPMorgan’s consumer division is working to build loyalty in customers by letting them redeem discounts similar to those offered by Groupon. The deal comes amid slumping demand for Internet coupons, as 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.
Earlier this year, Bank of America Corp. introduced online and mobile cash-back deals in the U.S., giving customers discounts after they visited stores including Aeropostale Inc. and The Body Shop Inc.
American Express Co., whose finance chief Daniel Henry sits on Groupon’s board, has partnered with mobile location service Foursquare Labs Inc. to deliver coupons to customers at stores where they have checked in with the application.
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.
To contact the reporter on this story: Douglas MacMillan in San Francisco at firstname.lastname@example.org
To contact the editor responsible for this story: Tom Giles at email@example.com