Daily deal site GoNabit sold to US giant Livingsocial

LivingSocial has acquired the Middle East's GoNabit for an undisclosed sum, a landmark deal for the region's fledgling digital industry.

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GoNabit, the Middle East's home-grown website for daily deals, has been acquired by the US internet giant LivingSocial, in a landmark deal for the region's fledgling digital industry.

The Dubai company offers group buying deals for businesses including restaurants, salons and hotels.

There has been an explosion of interest in such sites since Groupon, the market leader in the US, last year rejected a US$6 billion (Dh22.03bn) takeover by Google. The internet-search giant has since launched its own Google Offers product, while rival Facebook has also entered the fray.

The acquisition of GoNabit is one of the most significant deals in the Middle East's online industry since Yahoo acquired the regional portal Maktoob for $164 million in 2009.

GoNabit operates in the UAE, Egypt, Lebanon and Jordan, and claims to have saved consumers more than $5m in the past year. Group buying websites typically sign up a range of businesses to offer discounts, and take a percentage of the revenue.

LivingSocial, which is understood to have acquired 100 per cent of GoNabit, operates a similar model, and is the second-largest player in the US market.

Dan Stuart, the chief executive and co-founder of GoNabit.com, confirmed that the deal had taken place. He declined to specify its value.

Mr Stuart said he had received a number of offers for the business this year. "Three different offers reached a formal stage," he said. He added he would remain with the company following the acquisition, and plans to launch the business across "every market" in the region.

GoNabit's biggest deal to date was an offer for discount rooms at the Banyan Tree hotel in Ras Al Khaimah, which Mr Stuart said prompted $360,000 in transactions.

As many as 20 group-buying websites are believed to have launched in the Middle East, including the global market-leader Groupon this year.

Mr Stuart acknowledged it was becoming a crowded market, but said certain players would succeed through scale and good customer service.

"In every part of the world right now, there are people trying to enter this space," he said. "There's really only a couple of companies that operate at any kind of scale in this region."

The news comes as Cobone.com, GoNabit's rival in the Middle East, said it had secured a second round of funding from its key backer Jabbar Internet Group.

Jabbar has taken complete ownership of the firm, having bought out the minority shareholder Group Buying Global (GBG).

Cobone, which launched in August, claims to be the region's largest daily deal website, with 600,000 subscribers across five countries.

"We're focused on growing our company in the Middle East. Our goal is to increase our staff and offices," said Paul Kenny, the site's founder and chief executive.

He added Cobone was "ready for the task" of competing with LivingSocial following its entry into the Middle East.

"We're by far the largest group-buying site in the region," said Mr Kenny. Cobone says it has sold 214,000 coupons, saving consumers $11.2m.

There are now between 15 and 20 group-buying websites in the Middle East, although some have not survived, Mr Kenny said.

"A lot of the smaller players aren't making any money," he said. "Four have died this year, and I think another four or five will die this summer."

However, he said the group-buying model was sustainable as a marketing channel for businesses.

"Businesses' spending on marketing will move towards a channel that gives a return," he said. "It's a business that works extremely well".

LivingSocial also said yesterday it had acquired Ensogo, a deal site in Thailand and the Philippines, and DealKeren, an Ensogo company based in Indonesia. LivingSocial has also launched operations in the Netherlands.