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What:Shares ofGroupon Inc. were spiking today after the daily deals specialist reported a sizable investment from Atairos Management. As of 11:22 a.m. ET, the stock was up 12.2%.
So what: Atairos is purchasing convertible debt worth $250 million in the struggling online merchant, equivalent to about 6% of the company, and Michael Angelakis, CEO of the investment firm, also joined Groupon's board of directors.
Atairos is backed byComcast Corporation, which committed $4 billion to the investment firm when it launched earlier this year. Angelakis is the former CFO of the cable giant, and as part of the arrangement, Groupon said that Comcast would work with it to "identify and implement potential strategic partnership opportunities."
Now what:The gains in the stock today may have more to do with hopes of the partnership with Comcast than for the cash infusion from the investment. Groupon said the money would be used for general corporate purposes, including share buybacks.
It's unclear how a strategic partnership would benefit Groupon, however, though linking advertising networks seems to be one possible option. The daily deals vendor has struggled to turn a consistent profit since its IPO five years ago as it's expanded its business into products in addition to services. Comcast also seems interested in mining its connections with the local marketplace as its own division, Spotlight, offers daily discounts for local businesses.
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Regardless of whether any meaningful partnership comes to fruition, the investment constitutes a vote of confidence from an entertainment giant and will give Groupon additional resources to tap new customer bases, giving it an increased chance of long-term profitability.
The article Why Groupon Inc. Stock Popped Today originally appeared on Fool.com.
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