Google is near a deal to acquire Groupon, the pioneering online discounter, for as much as $6 billion, people with direct knowledge of the matter said Monday.
A deal, in the $5 billion to $6 billion range, could be struck as soon as this week, these people said, cautioning that the talks still could fall apart.
The acquisition would also be Google’s biggest foray into local business advertising online, a large and untapped market it has been trying to get into, most recently by promoting Marissa Mayer, an executive, to oversee the local business and trying to buy Yelp, the local review site, last year.
Over the last decade, Google has acquired dozens of companies, spending billions for the online advertiser Double Click and the video site You Tube.
Since it was founded in 2008 by its chief executive, Andrew Mason, Groupon has become the fastest growing Internet company ever.
Groupon, whose name is a combination of the words coupon and group, is a group-buying site with a local focus. Subscribers receive a deal each day, tailored to the users’ location and profile. Although Groupon will offer smaller side deals, the objective is to highlight one discount for each user. A typical deal is 50 to 90 percent off retail goods and services, like restaurant certificates, sky diving lessons and spa services. It’s a formula that has taken off, turning Groupon into a cash machine with more than 12 million registered users and estimated annual revenue above $350 million.
Over recent weeks, Groupon has been the subject of scores of takeover rumors. Both Google and Yahoo were among the company’s top suitors, according to the people briefed on the matter, with the latter prepared to pay about $2 billion. But Groupon’s founders rejected the approach as too low.
Groupon’s management also was concerned that Yahoo’s business prospects might ultimately hurt the company, and that a stronger tech buyer like Google would give it a competitive edge against potential rivals like Facebook.
As Yahoo’s approach sputtered, Google made an initial bid of $3 billion to $4 billion, these people said. But in the face of Groupon’s resistance, Google raised its offer to between $5 billion and $6 billion. The company is unlikely to offer more than that, according to one of the people with knowledge of the deal.
Google is one of the few buyers in the technology market that can afford a price that high. According to the company’s third-quarter report, as of Sept. 30, Google had $33.4 billion in cash or cash equivalents on hand.
Groupon’s investors include Yuri Milner’s Digital Sky Technologies, Battery Ventures, Accel Partners and New Enterprise Associates.
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