Business Insider has an interesting post up today on why Groupon turned down Google’s $6bn. The short answer is that they have that the value of the business will continue to increase and concerns that the Google deal would get stuck in months of anti-trust investigations. On the back of these concerns the Groupon board wanted a significant break fee from Google which would get paid out if Google didn’t complete the deal for any reason and which Google refused to provide. (For those of you wondering what ‘significant’ means in this context, there is no hard information but we do know there was a $700m break fee on the Google Admob deal which was at a $750m value.)
The most interesting thing for me about this article is the information about Groupon’s trading:
- revenue run rate as of Nov/Dec – $2bn
- subscribers – 40m total, having added 4m in the last week. This time last year they had 1.5m subscribers.
- employees – 3,100 total, up from 124 a year ago
There are many people who are still questioning Groupon’s sustainability, largely due to questions about whether they are delivering value to their local merchants and whether consumers will tire of getting daily deal emails. Given the numbers above it is easy to see why the board are confident that Groupon will keep growing, but I imagine they must have some data which mitigates the above concerns about sustainability – e.g. email subscriber churn rate and repeat customer rates for local merchants. Turning down $6bn is a brave thing to do.