In late 2010 Google offered as much as $5 billion to buy then private Groupon. At that time daily deals was an incredibly hot market segment and Groupon was the market leader; its business and global reach were surging.
It would have been the most expensive acquisition ever for Google at the time. But the deal feel through and Groupon went public. I argued then that it would have been crazy for Google to pay that kind of money for Groupon.
Since going public approximately a year after the failed Google acquisition attempt (November 2011) Groupon has seen almost 90 percent of its market cap disappear amid disappointing earnings, a weakening market for daily deals and growing investor skepticism.
The company has sought to diversify its voucher business and become the “local commerce operating system” for small business. However that transition, which includes mobile payments, restaurant reservations and a POS terminal system, isn’t happening fast enough for investors.
Late last week there were rumors about renewed Google interest in the company; Groupon is now worth just over $3 billion. However those rumors are probably unture.
Google’s own Offers business is doing relatively well and it has become an aggregator and syndicator of third party deals. The weakness in the deals market itself makes it extremely unlikely that Google would buy Groupon at this point (unless perhaps it were a “fire sale”).
One of the attractive assets that Google would have been buying in late 2010 is the Groupon local salesforce, then about 50 percent of the company’s headcount. However that asset is no longer as attractive as it once was, with myriad reported problems of turnover and employee discontent.
Beyond the Groupon brand arguably the most interesting assets the company has right now are its newer business lines (e.g., POS, mobile payments), which are immature. They would be worth far less than the company’s market cap and Google could build or buy these same assets, to the extent it doesn’t already have them (as it does with mobile payments), for considerably less than $3 billion.
Logic then suggests that we won’t be seeing a Google acquisition of Groupon at any time soon.