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Is Groupon a Takeover Target?

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By Douglas A. McIntyre Published
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Google (NASDAQ: GOOG) made a $6 billion offer for Groupon (NASDAQ: GRPN) late in 2010. The rumor then was the Groupon had revenue of $2 billion that year. It turned out not to be true, and Wall St. could see that when Groupon issued figures prior to its IPO. Groupon currently has a market cap of $8 billion. That may fall now that the SEC has begun to examine the company’s pre-IPO financials. Google may come back, if it believes that the Groupon model is still viable.

Several securities analysts claim that the Groupon model is not viable. Electronic coupon sales set for retailers have become passe. Retailers have learned that Groupon may bring short-term customers, but some complain that those customers do not come back. And the Groupon model has been mimicked by large companies such as Amazon.com (NASDAQ: AMZN).

However, Google has a huge shopping system of its own. It might use Groupon to increase that business. Google apparently still believes that e-commerce is an important business. The search company might augment that because of its broad relationship with local retail firms. Groupon’s system may not be flawed as much as its management’s execution is.

Google may find that Groupon has a second suitor if it makes an offer for Groupon. That would be Amazon, which has pressed into the local coupon space.

Groupon may be a wounded standalone company, but that does not completely undermine its potential long-term value.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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