Last week SanJose.com reported extensively about Google’s efforts to acquire Groupon for as much as $6 billion. The latest rumor is that the deal has collapsed, and that Groupon has decided to go it alone for now, hoping to increase its valuation. Based on other buyout rejections of the past few years, it can go either way for the coupon giant.
In 2008, Microsoft tried to buy Yahoo for a reported $47.5 billion. Jerry Yang turned them down to disastrous results. Yahoo’s stock price tumbled, its valuation was cut in half, and Yang was forced to resign. On the other hand, Yahoo itself offered Mark Zuckerberg $1 billion back in 2006 to take Facebook off his hands. Zuckerberg said no, and his site is now estimated to be worth forty times that. Then again, the gang at Groupon could take a lesson from social networking. Bebo was sold to AOL for a cool $850 million, but that was before Facebook took off. These days few people even remember Bebo, and AOL just sold it for $10 million.
Groupon’s gamble could be the wisest move its founders ever made, or it could be their downfall. It’s a gamble that they are willing to take.
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