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According to multiple reports late Friday, Groupon has walked away from a rumored $6-billion acquisition offer from Google, and is choosing to go it alone — and possibly file for an initial public offering next year. Rumors about a Google deal for the group-buying company have been swirling all week, with the price Google had offered reported initially at $2.5 billion and then as high as $6 billion. The collapse of the deal was first reported by a website associated with the Chicago Tribune, which quoted two sources with “direct knowledge of the situation,” and Groupon’s decision to walk away from the table was also confirmed by several other technology blogs through their own sources.
If it had closed at $6 billion, the deal would have been almost twice the size of the search company’s largest acquisition ever (the $3.1-billion purchase of DoubleClick in 2007), nearly four times the size of its second-biggest deal, the purchase of YouTube for $1.65 billion in 2006. There were many critics of the Groupon offer — some of whom argued that the two cultures were too dissimilar for Google to benefit from buying the company, and others who argued that Groupon was effectively just an email marketer, and wasn’t worth the huge multiples of revenue that Google was planning to pay.
Others, however, argued — as we did — that Groupon’s connection to local businesses and merchants, and its ability to pull those businesses online through the power of its group-buying discounts, would have made for a powerful marriage with Google’s vast web reach and its search algorithms. The web giant has tried repeatedly to reach local businesses through a variety of services, including its Google Place Pages and related Yelp-style recommendations, but has had little success. Some proponents of the deal believed that Groupon would have been able to give these efforts a gigantic boost.
According to the Chicago Tribune report, however, Groupon has decided that it is better off to stay independent, and focus on growing its business organically — a business that is reportedly going to pull in as much as $2 billion in revenue this year, and is still said to be growing rapidly. The magazine’s sources said that the company might consider an IPO, and would make that decision sometime next year. Before talk of the deal with Google began, Groupon was in talks with venture funds to raise another round of financing, after closing a round of $250 million earlier this year that valued it at $1.35 billion.
If Groupon did actually refuse Google’s offer, that puts it in fairly elite company — not every company would have the stomach to turn down $6 billion from one of the web’s premier players, especially since Groupon is less than two years old (although it’s possible this could be a negotiating tactic). One of the few companies that has turned down a multibillion-dollar acquisition offer and not lived to regret it is Facebook, which rebuffed advances from both Microsoft and Yahoo. Whether Groupon has enough growth left to reach that kind of status — or whether it can fetch enough of a premium in an IPO to make staying independent worthwhile — is the $6-billion-dollar question.
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Post and thumbnail photos courtesy of Flickr user Groupon