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Google buys Groupon for $2.5 billion?

While neither company has confirmed the story, the acquisition follows a week of buyout rumors

Financial trends and news by Faith Merino
November 28, 2010 | Comments (3)
Short URL: http://vator.tv/n/142f

Google has just purchased Groupon for $2.5 billion, according to an unnamed insider who spoke with VatorNews.  Neither Google nor Groupon could be reached for comment to confirm the report, but Vator’s source is reliable and the report falls in line with the recent string of Groupon acquisition rumors.

Talk about a possible acquisition by Google has been bubbling since November 19, when rumors first emerged that Google had made an offer of some $2 billion to $3 billion.  The rumors were first reported by Kara Swisher of All Things D, who claimed that Google and Groupon were already in acquisitions discussions.

Groupon has been quite the hot topic these days.  Earlier this month, Groupon was rumored to be considering raising funds that would value the company at $3 billion.  That rumor was followed by reports that Yahoo was looking to woo Groupon for as much as $4 billion—the second reported attempt by Yahoo to buy the social shopping company.  Earlier this year, All Things D reported that Yahoo and Groupon were in discussions about a possible acquisition for $1.7 billion, but Groupon ultimately rebuffed the low-balled offer and backed out of the deal.

Founded in 2008, Groupon’s revenues are said to be upward of $50 million a month, and an enormous round of fundraising in April raised Groupon’s valuation to $1 billion.  With 20 million subscribers and footholds in 29 countries across Europe, North America, Latin America, and Asia, Groupon has inspired hundreds of clones, some of which have, in recent months, begun outpacing Groupon (think LivingSocial).  Despite the dozens of rumors about acquisitions by Google, Yahoo, and eBay, Groupon has maintained that it wishes to stay independent. 

While the tech world was anticipating a buyout by eBay, many were surprised when, in October, Groupon partnered with eBay to bring local deals to eBay shoppers, using geo-targeting to find offers for the user’s specific geographic location.  Users who are members of the eBay Bucks Rewards Program who purchase a Groupon deal through eBay can earn 5% back in eBay Bucks.

VatorNews will follow this story and report on any further developments.


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Comments

LinkMunki ENLM
LinkMunki ENLM, on November 29, 2010

Well, generally rumours of google buying some company that is interesting and are making money comes true in the end! So I won't be surprised if/when this is officially announced.

:)


Comment_gbg
Jeff Molander, on November 30, 2010

This is a potentially bad deal for Google. Here's why. First, preface: I co-founded a company in the pay-for-performance space that Google acquired (Google Affiliate Network) so I pretend to understand this stuff....

Groupon is not a company offering **sustainable value** so much as they are a run-of-the-mill venture capital investment toy.

You see, Groupon is today's Restaurant.com -- minus the entrepreneurial sensibility. Restaurant.com burned through the restaurant market with its similar "buy a $25 gift certificate for $3" model. But they stopped when small businesses owners it served figured out the simple math. They looked at the profitability of customers. There wasn't enough to sustain participation with Restaurant.com's model.

Increasingly, qualified research is being published on Groupon's effectiveness http://bit.ly/f3Hn2N and the result is not surprising: Small business owners don't define "effective" as having anything to do with "profitable."

Groupon is advertising. But with a twist. It trains an "increasingly already trained" retail shopper to **expect** the discount, tip less and not return without receiving ANOTHER a profit-dinging discount.

Like in affiliate marketing, it's disingenuous to say, "Groupon gets paid on performance -- only when it sends customers to the door" when the facts are so stark. It sends customers who are remarkably un-profitable under this discount model.

Ironically, Chicago-based Restaurant.com got out of the short-term business just in time to re-structure its offer. The rest is history.

Bottom line: Groupon "trains" boatloads of customers to expect future discounts in a growing retail environment that breeds the same. Retail suicide is in full swing. And Groupon is not a real company offering **sustainable value** so much as they are a run-of-the-mill venture capital investment toy.


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