Earlier this week, Canadian Grocery Cash Back/Couponing APP Checkout51 announced that it had been acquired by News America Marketing (NAM), a subsidiary of News Corp.
News America Marketing also owns News Marketing Canada, which operates the popular Smartsource.ca grocery coupon service.
The acquisition is an interesting one and brings about several points to consider.
A few points to consider:
- No doubt that the acquisition of Checkout51 adds great advantages to the portfolio for News America Marketing (NAM), both in Canada and in the USA.
- However, did NAM seek out to acquire such a technology/service or did Checkout51 need to get bought out by someone because of lack of funding/cash flow and thus the price/deal NAM proposed was right for Checkout51 investors and founder? The terms of the acquisition were not announced but given the bridge financing Checkout 51 received from Bridge Financing Inc to help with their cash flow needs, it would not be too much of a leap to state that Checkout 51 needed to get acquired.
- This is the second acquisition of its kind for a Grocery Cash Back App from Canada. Last year, Groupon acquired Snapsaves (now called Snap) from the folks at Buytopia and are doing very well with it.
- Interesting that Canadian Grocery Cash Back apps are being acquired by American companies and American competitors such as ibotta.com or other are not being purchased…yet. One reason may be because Canadian firms have a far less valuation than their American counterparts. Ibotta, for instance, has already been funded to the tune of $20 million. Investors would require a healthy return that acquiring companies may not be willing to pay if a Canadian competitor is just as suitable for far less.
- There is a 3rd Grocery CashBack app in Canada called Zweet from the folks that own the highly successful Deals site Tuango. The acquisitions of Checkout51 and Snapsaves bode well for Zweet. Competitors of Groupon and News America Marketing now must look at these types of apps to better compete. As such, Living Social, Coupons.com, Retailmenot, Valassis/Harland Clarke and Catalina Marketing would be interesting suitors in the US. For Canada, Torstar may make sense. However, it would be financially more beneficial for Zweet to build their US volume and sell to a US based entity.
The following is the official Press Release for the Checkout51 acquisition announcement from News America Marketing.
NEW YORK, July 24, 2015 /PRNewswire/ — News America Marketing (NAM), a subsidiary of News Corp (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV), today announced the acquisition of Checkout 51, the data-rich, digital and mobile coupon company based in Toronto.
The Checkout 51 mobile app enables consumers to browse weekly discount offers on a wide range of grocery items including fresh produce, household and personal care, and then redeem the offers post-purchase simply by taking a photo of their receipt.
NAM, the premier publisher of print and digital coupons in the United States and Canada, completed the acquisition on July 24th. Checkout 51 will continue to be based in Toronto and the app will retain its name.
The Checkout 51 app was ranked Best for Cash Back in 2014 by Consumer Reports1 and has garnered positive reviews from consumers2 since its launch in 2012 in Canada and 2014 in the U.S. It is the #1 receipt recognition app in Canada3. The company currently has over three million registered users in the U.S. and another one million registered users in Canada. 94% of Checkout 51 users are under the age of 55 and 81% are under 454. Since its launch, Checkout 51 has paid out nearly $15 million (USD) in savings to consumers5.
“This is a significant moment for the digital transition and development of News America Marketing. Bringing Checkout 51 into the News America Marketing family allows us to offer new mobile options for our clients to reach consumers, with a smartphone-friendly, paperless and highly personalized experience that many of today’s consumers, particularly Millennials, find attractive,” said Marty Garofalo, CEO, News America Marketing. “We believe Checkout 51’s mobile savings app is the perfect addition to News America Marketing’s SmartSource family of products and services which have long been a staple of savvy consumers across the U.S. and Canada.”
“We are thrilled to be joining News America Marketing, a company with a long-standing pedigree of helping consumers stretch their budgets,” said Noah Godfrey, Co-founder and General Manager, Checkout 51. “News America Marketing’s relationships within the consumer packaged goods industry will give us the additional reach that will allow us to further expand our offerings to give more consumers more savings opportunities than ever before.”
“News America Marketing’s leadership is fully committed to digital as it relates to consumer marketing along the path to purchase, and you can expect to see more product evolutions and additions to our portfolio as we anticipate and respond to the needs of our clients and our retailer partners,” added Mr. Garofalo.
2 Currently rated 4.5 out of 5 stars in Apple’s App Store.
3 Based on ranking in the Canadian Apple App Store, Lifestyle section
4 Based on Checkout 51 membership database
5 Based on Checkout 51 offer redemption database
About News America Marketing®
News America Marketing, a subsidiary of News Corp [NASDAQ: NWS, NWSA; ASX: NWS, NWSLV] is the premier marketing partner of some of the world’s most well-known brands. From our iconic Sunday coupon insert, SmartSource Magazine®, to our innovative digital savings platforms, News America Marketing’s SmartSource®-branded advertising and promotion programs are an integral part of America’s shopping routine. We reach millions of consumers each day through our network of 1,900+ publications1, 56,700+ retail stores2, and 500 online partner sites including our own SmartSource.com3. Since 1988, we have delivered advertising and promotions that are proven to help brands succeed.
1NAM market list effective August, 2015
2Based on an aggregate of NAM cycle 8, 2015 Coupon Machine for all classes of trade with the exception of specialty stores that accept only Carts or Shelftalk
3As of December 2014
About Checkout 51
Checkout 51 Mobile Apps ULC, the company being acquired, operates the mobile app that helps consumers save money on their groceries simply by taking a photo of their receipt. Launched in Canada in 2012 and the US in 2014, Checkout 51 is now one of the most popular savings apps in North America1. Over four million members have already saved a total of USD $15MM2. Checkout 51 works with many of the largest packaged goods companies in the world, allowing them to deliver exactly the right offer to the right person at the right time via their unique mobile platform.
The Checkout 51 app is available for free in the Apple App Store, Google Play, and at checkout51.com.
1 Based on ranking in the US & Canadian Apple App Stores, Lifestyle section
2 From Checkout 51 offer redemption database