Money Matters - Simplified

Groupon turns down Google’s $6bn acquisition bid?

Groupon, an internet-coupon service that was founded in 2008, provides its over 35 million users discount deals.

The market is abuzz with speculations that the founder of Groupon (an internet-coupon provider service) Andrew Mason has turned down search giant Google’s reported $6 billion acquisition proposal.

As told by an insider familiar with the matter, in addition to nearly $6 billion, Google was also offering hefty incentives to Groupon’s managers if they achieved performance targets in the specified time period.

However, insider added that the Chicago-based company's CEO Mason and other founding members were hesitant to sign the deal as they had some concerns related to the future of their company and employees; hence the billion dollar deal fell apart.

Reports of this acquisition deal started last week, however, both Google and Groupon did not confirm them.

Groupon, an internet-coupon service that was founded in 2008, provides its over 35 million users discount deals.

Why deal fell apart?
Google is on buying spree for some time and it might have showed interest in Groupon as it wants to add new dimensions to its already powerful and ever growing advertising network.

Reportedly, the things did not work out and reasons are still not known. According to Graphic.ly CEO Micah Baldwin, “It all changes when the founder drives a Porsche.”

As told by an insider familiar with the matter, in addition to nearly $6 billion, Google was also offering hefty incentives to Groupon’s managers if they achieved performance targets in the specified time period.

Baldwin’s point is simple that if the start-up is making its founders enough money then why should they bother about selling it.

Google purchased online advertising service DoubleClick in 2008 for $3.2 billion, the highest so far.

In October, it was rumored that Yahoo had offered over $3 billion to buy Groupon.

Google will survive
There are market analysts who believe Groupon’s rejection is good for Google as there’s simply no point in buying a start-up for ridiculously high price.

Ever since Groupon has been founded, various start-ups just like it have come into existence such as CrowdSaving, BloomSpot, 8coupons, BuyWithMe etc.

As per Forrester analysts Sucharita Mulpuru, Google does not need Groupon to enter into local as “there is nothing that Groupon has that Google couldn’t build themselves, or partner with one of the other half-dozen viable contenders in the space to get for a far cheaper price than Groupon’s.”

In just North America, there are around 200 sites that resemble Groupon. The number worldwide is over 500, and over 100 of them are based in China alone.