Groupon may be bought soon. The daily deal website operator is said to be looking for a potential buyer and reports indicate that it has already approached possible suitors. Groupon executives as well as representatives from investment banking are said to have approached a number of publicly traded companies
Good financial position
According to reports, the company has been up for sale for a long time but the executives had not taken an aggressive move to source a buyer. Groupon has a good financial standing. Although the company has been posting a drop in revenue for the last nine quarters, the drop may have been artificial.
The company has been dropping off underperforming global operations as well as getting rid of low-margin merchandise closeouts. This seems to have had an impact as the company reported profits in two of the last three quarters. Additionally, the company enjoys a clean balance sheet. Its stock is also trading below last year’s near-term highs but more than doubled since 2016.
Reports previously indicated that Groupon had turned down a $6 billion offer from Google. Currently, the company has a market cap of $2.5 billion. It may be argued that Alphabet is no longer interested in the deal. This is because promotion of deals is no longer a booming business like it was before.
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However, Google still has a lot of interest in local search and this is where it may need Groupon so as to cash in on local queries. Alphabet may need Groupon to load more contacts of local businesses which want to be noticed on its already filled Rolodex. It is more tempting considering that Alphabet may not need the $6 billion to close the deal.
Alibaba is also on the list of potential buyers. The Chinese e-commerce giant already has a 5.6% stake in Groupon. This may not be a direct guarantee of a deal as Alibaba minority stakes in other small companies. However, Groupon has been quickly spreading its wings in China and this can be good for Alibaba as it seeks to pioneer in the field of group-buying.