Groupon, a Chicago-based internet coupon service with more than 35 million users, walked away from an acquisition offer from Google, according to a Bloomberg report carried in the Sydney Morning Herald.
The proposed acquisition reportedly fell through amid hesitation by Groupon's founders. The start-up will decide next year whether to sell shares in a float instead, a source said. The discussions could resume if both sides overcome their differences.
Google had offered $US6 billion (NZD$7.8 billion), including incentives that would be paid to managers if performance targets were met, people familiar with the matter had said last week.
Groupon would have helped its new owner to expand in the $US133 billion American local ad market and lessen its reliance on internet search advertising.
''Clearly Google wants to get into the local space and Groupon was one way,'' said Aaron Kessler, an analyst at ThinkEquity in San Francisco. ''I don't think from a Google perspective that if they miss out, that there's not other ways to get into local.''
Groupon chief executive Andrew Mason had the biggest say in this decision as the largest shareholder, according to some sources.
Google CEO Eric Schmidt had been willing to pay almost twice the $US3.2 billion he spent on DoubleClick, his next most expensive target, to add features and repel a threat from such rivals as Facebook.
Google, which boasts US$33.4 billion in cash and marketable securities, had initially offered between $3.5 billion and $4 billion to buy Groupon, a source said.
The start-up, which was also contemplating raising new venture funding, held out, eliciting a sweetened offer from Google, the person said.
Founded by Mr Mason in 2008, Groupon has attracted 35 million users in more than 300 global markets by offering steep discounts on such items as pedicures, hotel stays and bike tune-ups.
The company makes money by keeping part of the revenue raised by the coupons. Groupon's sales may top $US500 million this year, two people familiar with the matter have said. – More at Sydney Morning Herald