Google is prepared to pay between US$5 billion and US$6 billion for Groupon, the daily deals site, people familiar with the deal said on Monday.
A deal could be struck as soon as this week, the people said, cautioning that the talks could still fall apart.
At that price, Groupon would be the largest acquisition ever for Google. The deal would make Google the market leader in the fast-growing arena of locally tailored discounts.
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 past decade, Google has acquired dozens of companies, spending billions for the online -advertiser DoubleClick and the video-sharing site YouTube.
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 percent 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 of more than US$350 million.
Google declined to comment on the report, and Groupon could not be reached.
During 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 US$2 billion. However, Groupon’s founders rejected the approach as too low.
Groupon’s management was also 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 US$3 billion to US$4 billion, these people said. However, in the face of Groupon’s resistance, Google raised its offer to between US$5 billion and US$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 US$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.