Why Groupon Said "No" to Google's $5 Billion Overture

[Brett_Tabke]

Confirming lots of speculation, a source close to Groupon board members tells us that anti-trust concerns ultimately forced Groupon to turn down Google's $6 billion offer. This source says the view on Groupon's board was that a Google-Groupon merger would draw more regulatory scrutiny than any other deal Google has ever done.

Because of this view – that Google-Groupon might not be allowed to go through and that it would take months and months to find out the bad news – board members decided they would need a significant break-up fee if they were to accept Google's offer.

We don't know the number, but our source says the board wanted a break-up fee akin to the one Google gave DoubleClick. A source close to DoubleClick's executive team at the time of that merger tells us the company "got significant protection." In agreeing to acquire AdMob for $750 million, Google also agreed to a $700 million kill fee.

[businessinsider.com...]

[Eurydice]

Groupon has two major problems:

- The idea is easy to replicate. There are at least 50 clones now, and more will come.
- The 50% fee can be cut. A competitor offers 40%; the next offers 30%; and soon, it's down to 10%.

Groupon should have accepted the offer.