Yahoo offering to buy Groupon...again?

Faith Merino · November 9, 2010 · Short URL:

Sources say that Yahoo is willing to pay as much as $4 billion for the group deals company

A little over 24 hours after Bloomberg reported rumors that Groupon is looking to raise funds that would put its valuation at $3 billion, now reports are surfacing that Yahoo, which has a market cap of $22 billion, has made an informal offer to buy Groupon for as much as $4 billion, according to an unnamed source.  Business Insider reported on the offer and even assured readers: “That number may seem high, but our source is reliable.”

So far, it doesn’t sound like an official offer was made (BI calls it an “offer to offer”), but Yahoo has not gone out of its way to hide its interest in Groupon.  In October, Kara Swisher of All Things Digital reported that unnamed sources had informed her of Yahoo’s interest in acquiring Groupon in the hopes of re-energizing the company.  Reports claimed that Yahoo had made an offer to buy Groupon for $1.7 billion, to which Groupon was initially receptive, but the daily deals company ended up pulling out at the last minute.

But now, Groupon insiders are reporting that the company is considering an exit strategy.  Specifically, the company is considering an IPO, an acquisition by a larger company, or raising more funds, which was the source of Monday’s Bloomberg report.  The Chicago-based company raised $135 million, giving Groupon a valuation of about $1.3 billion back in April.

The popular website has found unmatched success in its daily group deals, which have brought so many customers to local businesses that Groupon offers consulting programs and seminars for merchants who suddenly find themselves bombarded with new traffic.  Groupon’s wildfire success has spurred the upcropping of dozens of clones, such as LivingSocial, which raised a not-too-shabby $25 million back in March.  Groupon insiders maintain, however, that Groupon is “many, many multiples larger” than LivingSocial, which is its nearest competitor.

Yahoo, of course, is not the only one interested in snapping up Groupon.  Other potential buyers include Amazon and Google.  Many have also speculated upon an offer from eBay, which has not materialized yet, but came just a tad bit closer in October, when eBay and Groupon announced a partnership that would bring Groupon deals to eBay shoppers who could then earn eBay Bucks.

Since it was founded in 2008, the company has raised $173 million in funding and claims to have been profitable after only eight months.  Groupon, which could not be reached for comment, plans to expand to serve 300 cities by the end of the year.

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