Has Google just paid US$2.5bn for Groupon?

29 Nov 2010

There are unconfirmed rumours circulating that Google has just closed a US$2.5bn deal to acquire fast-growing deals of the day web player Groupon.

It emerged in recent weeks that Google and Groupon were in talks and an acquisition target price of between US$2bn and US$3bn had been suggested.

Acquiring Groupon would give Google an undeniable edge in a fast-emerging e-commerce market that brings business directly to the door of local businesses.

Groupon does so by using the web to enable groups of individuals to buy products in bulk. The site makes a daily offer to each and every community in the 230 markets it is active in. If a certain number of people sign up for the offer the deal becomes available for all.

Global appeal

The site has more than 20 million subscribers and plans to serve 300 cities worldwide by year’s end. The company has introduced seminars and a training programme for merchants who have reported they have been overwhelmed by the amount of business the site has sent their way.

The idea for Groupon came from CEO Andrew Mason and his former employer Eric Lefkofksy put in US$1m seed money to develop the idea.

Since then, the rapid growth of the company has attracted investment of US$170m from investors, including Facebook, and an investment group led by Mail.ru Group in April valued the company at US$1.3bn.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years