Groupon Passes On Google Acquisition Bid
The reported $6 billion offer wasn't sweet enough to convince the daily deal site to sell.
Often described as the fastest growing company ever, the two-year-old Groupon is staying put in Chicago as it watches its revenue rocket, even as competing bargain deal sites – some large, many small -- approach 100 in number.
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Groupon's founder, Andrew Mason, reportedly met with Google's top management, but decided to go it alone, probably to float an initial public offering (IPO) sometime next year if the market holds up. Both firms have declined to discuss the widely reported talks. Mason met with reporters recently, but only with the proviso that there be no mention of any possible Google acquisition talks.
Groupon's financials aren't public because the company is privately held, but various media reports have put the firm's annual revenue at $2 billion and growing rapidly. Its revenue hit the $500 million mark faster than Facebook, which likewise spurned earlier acquisition offers and decided to hold out for an IPO someday in the future.
Groupon gets half of the sales offered by the deals and discounts on its sites scattered around the country. Offers typically range from car wash and beauty spa discounts to restaurant and photo shop deals. Experian Hitwise reported recently that Groupon was receiving 79% of visits of some 80 sites evaluated.
While Groupon has a substantial lead-to-market in the deal-site category and is running hard to stay in the lead, it's not difficult to get into the business. "You can set up your own daily deal website in an hour," Ira Weiss, a professor at the University of Chicago's Booth School of Business, told Bloomberg Businessweek. "They happen to have a lead on it, but if I were them I would have sold for that price."
Groupon's success also represents a victory for Eric Lefkofsky, the company's largest investor. If the $6 billion valuation -- or more -- holds up, the $1 million he invested in Mason's business plan will likely make Lefkofsky a billionaire.
Groupon also gives Chicago some desperately needed high-tech bragging rights as its longtime technology pacesetter, Motorola, is breaking up and its mobile unit possibly heading to California.
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