Groupon Spurns Google: Bad Move or Brilliant?

| About: Alphabet Inc. (GOOG)

Groupon will reportedly decide to turn down an acquisition offer from Google (NASDAQ:GOOG) and time will tell if the move is brilliant or insane.

According to the Chicago Tribune, Groupon has decided to turn down an acquisition offer from Google, which was rumored to be offering $5 billion to $6 billion for the company.

Instead, Groupon will decide whether to go public in 2011.

The threads in this Google-Groupon saga are fascinating—especially since there’s such a large sum of cash involved.

Is Groupon’s decision to turn down Google bad or brilliant? Two thoughts:

  • From a tech and Web innovation standpoint, it’s heartening to see Groupon turn Google down. If the big guys gobbled up every company that could be a threat innovation would slow. The playbook is simple if you’re Google or any other large player. Allow startups to accelerate only to the point where they aren’t a big threat. Google and Groupon could have been a local commerce match made in heaven. Now Groupon could become a big e-commerce player and maybe rival eBay or Amazon.
  • But the dollars are ridiculous. Would you rather have $5 billion to $6 billion today or roll the dice for a larger payday (and potentially change the world) tomorrow? Tough call. If Groupon goes public, Kara Swisher puts Groupon’s revenue at a $2 billion run rate, it may be able to garner a market cap much higher than $6 billion. Google could always come back to the negotiating table. The other side of that equation is Groupon could fumble and be like Digg, a company that rejected takeover overtures and is now forever in the “would of, should of” category.

Of course, Groupon’s fate could rest somewhere in between those two extremes, but it’s one helluva coin flip to ponder.

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