SYS-CON MEDIA Authors: Liz McMillan, Carmen Gonzalez, Zakia Bouachraoui, Roger Strukhoff, David Linthicum

Related Topics: Cognitive Computing

Cognitive Computing : Article

Google Reportedly Ready To Blow $6 Billion on Groupon

That’s more than Google paid for any other acquisition; naturally there’s talk it’s overpaying

Google is reportedly ready to shell out $5 billion-$6 billion – evidently more like $6 billion – to buy two-year-old Groupon.

The All Things Digital blog says the bid works out to $5.3 billion down and $700 million in earnouts unless negotiations fall apart.

That’s more than Google paid for any other acquisition. It only spent $3.1 billion on DoubleClick and $1.65 billion on YouTube. Naturally there’s talk it’s overpaying.

Groupon and its daily discounts would get Google, whose search practices are now being investigated by the European Commission for antitrust violations, into local business online advertising.

Groupon is supposed to have upwards of 12 million registered users and revenues of around $350 million a year with a run rate that Needham & Co analyst Mark May puts at $1 billion, double most estimates.

It’s said to be the fastest-growing company ever and it’s also supposed to be one of Google’s largest advertisers, spending maybe $50 million a year with the search site. Google is assuming its popularity will last past the recession and won’t be copied to death. It’s also supposed to be an edge against Facebook, which has also started a deals offering.

The New York Times says Yahoo made a $2 billion bid that Groupon dismissed as too low. Enter Google with an offer of $3 billion to $4 billion that it had to raise.

At the end of September Google had $33.4 billion in the bank.

Groupon is backed by around $170 million from Moscow’s Digital Sky Technologies – which also backed Facebook and Zynga – Battery Ventures, Accel Partners and New Enterprise Associates.

Groupon sends daily offers of steep 50%-90% discounts on retail goods and services to users and keeps 50% of every deal sold. The deal only kicks in when a certain number of consumers buy in.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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