No Five-Finger Discount for Google

As the final purchase price for wildfire online start-up company Groupon approaches the $6 billion dollar mark, it would appear that there is no five-finger discount or manufacturers rebate in sight for proposed buyer Google.



Negotiations taking place over the past several months have seen the online voucher distribution company’s value pushed up, up and away, with the most recent figures valuing the website at $5.3 billion, not including a $700 million cash buyout of current Groupon stakeholders which has been hinted at by Google.



All Things Digital, the online news breaking firm, has reported that a deal will be struck early in the new year following discussion of the sale dating back to early 2010. ATD confirms that they acquired news of the sale from an anonymous insider which is "very close" to both parties to the sale. In terms of sheer spend, the acquisition would be Google’s most expensive to date, costing more than double their 2008 purchase of video web hosting site YouTube.



A major factor behind the sale is the fact that access to Groupon mailing lists and customer spending habits would provide Google with invaluable market research statistics and drive their expansion into other areas of the online and offline marketplace. The city-specific focus of the company represents a



Groupon itself has been hugely successful thus far, growing from the start-up stage to more than 1,000 employees in just over two years, with an estimated 50 million+ users worldwide that is set to more than double over the coming twelve months. Much of the potential in the Groupon business model lies in its daily communication with members. Everyone signed up for Groupon receives an email with a number of daily deals available in their city, typically discounted from 40 to 70% off their regular price.



It is this direct customer communication which is so attractive to Google execs and which, if it is remotely justifiable, will justify the $6 billion price tag attached to the domain hosting and ownership of the current Groupon site.