Google’s $6 billion offer to buy coupon service Groupon would have made its founders and directors very, very rich, but antitrust concerns kept Groupon from saying yes.
A source close to Groupon’s board of directors said the board was concerned that a Google takeover would have drawn more scrutiny from anti-trust regulators than other deals Google has pursued.
That is not a small concern as Google is in the middle of two anti-trust investigations. One is in Europe, and another other its deal with ITA. Google also dealt with anti-trust concerns when it purchased web advertising companies Double-Click and AdMob. Anti-trust concerns also kept Google from taking over Yahoo’s search engine operations, later Yahoo partnered with Microsoft’s Bing search engine.
Because board members were worried that months of waiting on the merger could possibly result in a no-go from regulators, they decided they would need a large payment in case the deal did not go through if they were going to accept the Google’s asking price.
The exact price isn’t known, but a source said the board asked for a break-up fee close to what Google paid during the Double-Click dealings. A source involved in that process said Double Click’s directors “got significant protection. During Google’s $750 million purchase of AdMob, Google agreed to a $700M payment if the deal died.
Whatever amount of protection Groupon wanted, Google wouldn’t agree to it. This made it an easy decision for Groupon directors, who didn’t see it as being worth the risk for something that was only three times the run-rate Groupon recently reached.
Based in Chicago, Groupon has been an internet darling being featured at CNN, CNBC and USA Today. The company primarily delivers daily deals to people in their local city. Approximately 300 cities are listed. It makes money by taking a 50 percent cut of every deal, and businesses see an increase in new customers. Groupon is expected to be valued at $1.3 billion.