Google Inc., owner of the world’s most popular search engine, is close to an agreement to acquire daily coupon company Groupon Inc. for about $6 billion, according to two people with knowledge of the negotiations.
The deal may be clinched as early as this week, said the people, who declined to be identified because the talks haven’t been made public. The purchase price would include payments to Groupon executives if the acquisition meets certain performance targets, one of the people said.
Google would use the purchase to benefit from surging demand for coupons, sent via the Web, that offer discounts on everything from dinner cruises to dental exams. Groupon’s strategy is easy to copy, fueling concern that Google wouldn’t be able to wring a high enough return on its most expensive acquisition, said Colin Gillis, an analyst at BGC Partners.
“If you overpay for anything, it will be a controversial buy,” said Gillis, who has a “hold” rating on Google and does not own its shares. “Groupon’s business is subject to mimicry.”
At the price being discussed, Google would be paying almost twice the $3.2 billion it paid for online advertising provider DoubleClick Inc. Technology blog AllThingsDigital reported yesterday that Google has offered $5.3 billion, plus $700 million in so-called earnouts, payments that reward Groupon executives for meeting certain goals.
A final agreement hasn’t been reached and talks could still break down, one of the people said. Aaron Zamost, a spokesman for Google, declined to comment. Julie Mossler, a spokeswoman for Groupon, didn’t immediately respond to requests for comment.