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Gilt City Acquires Daily Deal Site BuyWithMe

Lifestyle and luxury daily deal site Gilt City, part of the Gilt Groupe, has shelled out on a new purchase for itself: BuyWithMe, once believed to be the third-largest daily deal site in the U.S. after Groupon and LivingSocial. The terms of the acquisition were not disclosed.

Before the merger, Gilt City operated in 10 cities, and BuyWithMe operated in 13. Gilt City will not continue to operate in all of BuyWithMe’s markets, just in “the markets that make sense for the Gilt customer,” a Gilt spokeswoman said. Cities like Austin, Dallas and Phoenix are being phased out. Former BuyWithMe members in the markets that Gilt City is not expanding to will receive other Gilt Groupe deals. During a transition period, BuyWithMe’s previously scheduled sales will take place in the markets that Gilt City also serves.

So far, the new combined sites are operating in 13 markets: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, Philadelphia, San Diego, San Francisco, Seattle, and Washington, DC.

Just last week, Gilt City teamed up with Google (NSDQ: GOOG) Offers.

BuyWithMe appeared to be on a roll earlier this year, when it acquired six other daily deal sites, according to CrunchBase: TownHog, ScoopSt, Edhance, Groop Swoop, DealADayOnline and LocalTwist. But the company may have been in trouble for awhile. It laid off nearly half its staff–about 120 people–last month, and BetaBeat reported last week that an agreement with Gilt was underway.

One of the laid-off employees, Peter D’Amato, wrote about his experience at BuyWithMe for TechCrunch:

Employees were often kept in the dark about changes affecting the entire livelihood of the company. Most assumed the company was healthy. In September, our new Chief Marketing Officer was talking about Superbowl ads, and shares in the company were meted out to employees. Just three weeks ago, a new copywriter was hired, leaving a job in publishing. Though there were signs that BuyWithMe was not as competitive in the group-buying ‘deal space’ as it would have liked, the company emphasized that it maintained a strong position-claiming the number three position behind Groupon and LivingSocial….While the company blamed a capital market that had “dried up” for the layoffs, many within the company complained about the aggressive acquisitions made.

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