Report: Groupon spurns Google's takeover attempt

Dec 04, 2010

(AP) -- Google Inc.'s attempt to buy local-coupon site Groupon Inc. appears to have failed for now, according to published reports.

Groupon, whose ties to local merchants and some 35 million subscribers worldwide made it a company worth potentially $5 billion to $6 billion to Google, has decided to stay independent for now, according to the Chicago Tribune, The Wall Street Journal and The New York Times, which cited unnamed sources close to the negotiations. The reports say Groupon may pursue an initial public offering of stock.

Google declined comment Saturday. Messages by The Associated Press for Groupon representatives were not returned Saturday.

Groupon, a 2-year-old startup based in Chicago, dangles a different bargain each day to people signed up for the service.

Google was pursuing Groupon in an attempt to turn the Internet's largest advertising network into an even more powerful marketing vehicle. It would have marked the highest price that Google paid for a company, eclipsing its $3.2 billion purchase of online advertising service DoubleClick Inc. in 2008.

Forrester Research retail analyst Sucharita Mulpuru said Groupon made a mistake if the reported $5 billion figure had been an up-front cash payment "because that was the best the company would do on a valuation standpoint."

But Mulpuru said that if the proposed payout was some kind of staggered deal, subject to Groupon meeting certain performance targets over the next few years, walking away "wasn't such a bad idea, because they probably weren't going to meet those hurdles."

Groupon's aggressive expansion may mean that the site is "already coming up against diminishing returns, and that's been fundamentally one of the biggest challenges of this space," she said in an interview with the AP. "The success of the business is based on great deals, and to get great deals, you have to have a lot of salespeople out there selling, and that's an expensive way to grow a business."

Groupon employs about 3,000 people and is run by its 30-year-old founder, Andrew Mason.

Groupon has spawned numerous copycats, including LivingSocial, CrowdSavings, BloomSpot, Tippr and Scoop St. The mimicry has raised worries among some analysts that Google is paying far too much for a business that can so easily be cloned.

But Google could have easily afforded the deal, with $33 billion in cash as of Sept. 30. Mulpuru said a technology company such as Google might be willing to pay more than the company's value to keep it out of the hands of rivals such as Yahoo Inc. and Microsoft Corp.

The privately held company raised about $165 million in venture capital to get off the ground.

Besides North America, Groupon also operates in South America, Europe and Asia.

Explore further: Ticketfly buying WillCall for on-premise data

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Google close to buying Groupon: reports

Nov 30, 2010

Internet search giant Google is close to a deal to buy online discount shopping site Groupon for as much as six billion dollars, The New York Times and a leading technology blog reported.

Amazon invests $175M in Groupon competitor

Dec 03, 2010

(AP) -- Amazon.com Inc. said Thursday that it invested $175 million in social coupon service LivingSocial - the latest sign that the online retailer is delving into promising new methods of e-commerce.

Recommended for you

Ticketfly buying WillCall for on-premise data

Aug 21, 2014

Ticketfly Inc., a San Francisco-based technology company among several posing a challenge to Ticketmaster, is acquiring WillCall Inc., a crosstown rival that turns your smartphone into a mobile wallet at live events.

HP revenue inches up after years of decline

Aug 20, 2014

Hewlett-Packard on Wednesday reported that its quarterly revenue rose for the first time in three years, nudged by improved computer sales everywhere except Russia and China.

Restaurants experimenting with pay-in-advance tickets

Aug 20, 2014

With restaurant patrons increasingly jumping on the Internet to make reservations, some high-end eateries here and across the country are adding a new tech wrinkle: having their clientele pay for their meal in advance using ...

Chip maker Infineon to buy California firm for $3B (Update)

Aug 20, 2014

German chip maker Infineon Technologies AG says it has agreed to pay $3 billion in cash for California-based semiconductor firm International Rectifier, which produces power-management components used in everything from cars ...

User comments : 0