Google in Groupon Deal? - Image: smemon87 (Flickr.com CC-BY)
Yesterday there was a rumor that Google had made a deal to purchase daily deal site Groupon for $2.5 billion. However, inside sources have said that those rumors were not true. For one thing, Groupon had already turned down an offer of $3 billion from Yahoo, and Google was planning a much larger offer. Today the inside sources have revealed that Google is planning to buy the site for a total of $6 billion, its largest purchase ever.
The deal with Groupon is a little different. Google will make a one-time cash payment of $5.3 billion and then hold $700 million in reserve. That reserve cash will be based on employee retention when the merger is completed. Many companies work this kind of clause into their merger contracts to ensure that they have the necessary employees to continue running the company.
If the inside sources prove accurate then Google will be a leader in the online advertising world. But there is a small hitch in the plan. The share prices for Google have dipped by 3% on the news that they will make such a large cash outlay in the near future.
Many have criticized Google for failing to stay close to their core business with the many acquisitions that they have made over the past year. However, Google is well known for buying that which they cannot build themselves and Groupon is one of those instances. They have built a massive traffic and advertising firm that will become a major profit machine in the hands of Google.
