By Agency Reporter

Monday, 6 Dec 2010

SAN FRANCISCO: Groupon Incorporated, a Chicago-based Internet-coupon service with more than 35 million users, walked away from an acquisition offer from Google Incorporation on Friday, according to a person with knowledge of the matter.

Bloomberg reported on Saturday that the proposed acquisition fell through amid hesitation by Groupon‘s founding team, an official of Groupon, who requested anonymity because the talks were private, said on Saturday.

The startup will decide next year whether to sell shares in an initial public offering instead, the person said. The discussions could resume if both sides overcome their differences.

Google had offered $6bn, including incentives that would be paid to the target‘s managers if performance targets were met, people familiar with the matter had said this week.

Groupon would have helped its new owner expand in the $133bn US local-ad market and lessen its reliance on Internet-search advertising.

An analyst, ThinkEquity LLC, Mr. Aaron Kessler, said, ”Clearly Google wants to get into the local space and Groupon was one way.

”I don‘t think from a Google perspective that if they miss out, that there‘s not other ways to get into local,” he added.

The Chief Executive Officer, Groupon , Mr.Andrew Mason, had the biggest say in the decision as the largest shareholder, according to another person familiar with the talks. He had concerns about the strategic direction the company would take under new management, the person said.

Mason also was concerned about what could happen to merchant relationships and his employees, according to the person.

Google’s Chief Executive Officer, Eric Schmidt had been willing to pay almost twice the $3.2bn he spent on DoubleClick Incorporated, his next- most expensive target, to add features and repel a threat from such rivals as Facebook Incorporated.

A spokeswoman, Google, Ms.Jill Hazelbaker, said that the company doesn‘t comment on rumors or speculation.

Google, which boasts $33.4bn in cash and marketable securities, had initially offered between $3.5bn and $4bn to buy Groupon, a person familiar with the matter has said. The startup, which was also contemplating raising new venture funding, held out, eliciting a sweetened offer from Google, the person said.

Source: Punch