It is reported that Google is working out an agreement to buy the online coupon service Groupon for about $5 to $6 billon.
On Tuesday, the deal surfaced and could be settled as soon as next week, people with knowledge of the companies’ negotiation told the media.
The purchase would help Google benefit from the rising popularity of Internet coupons offering discounts for things like restaurants, services and vacations. The company’s business is also easy to copy; leading some analysts to worry that Google may not be able to secure a strong return on its investment.
“If you overpay for anything, it will be a controversial buy,” said Colin Gillis, an analyst with BGC Partners. “Groupon’s business is subject to mimicry.”
A $6 billion price tag for Groupon would mean Google would pay nearly twice, what it paid for DoubleClick, the online advertising provider in 2007.
Google is trying to expand its reach beyond its search engine and web advertising services to include mobile marketing, to help it grow and keep from losing business to Facebook, that social-networking service is also trying to expand features and attract more online traffic to its site.
Groupon was founded two years ago in Chicago and now sends daily deals to people in 300 cities. It makes money by taking a 50 percent cut of every deal, and businesses see an increase in new customers. Deals, or groupons, become active when sales hit a certain number, which encouraged people to pass on the deals to friends. According to analysts, the company is valued at about $1.3 billion.