Founded 10 years ago, Groupon is considered the pioneer of the daily-deal business but has seen its business strategy and focus continually shift over the past few years. And, perhaps as a result of the changing pace of business, the company has been reportedly aggressively looking to find a potential buyer.
According to an exclusive report on Recode, sources familiar with the matter said several Groupon executives, as well as bankers who represent the company, have been in contact with a number of public companies over the past month trying to dum up interest in acquiring the Chicago-based company. The success of those efforts is unknown, and Groupon representatives declined to comment on Recode’s report, but the daily-deal pioneer hasn’t been shy about its interest in being acquired.
Shares of the company have soared more than 10 percent in the hours since Recode’s report.
In 2010, Google made a $6 billion offer for the company, but Groupon turned that number down. A year later, on its IPO day, Groupon was worth more than $16 billion—the second-largest valuation for a tech company at that time—which made the decision to turn down Google seem like a smart one.
Today, though, the daily-deal market has markedly declined, leaving the company with a valuation of about $2.4 billion. Revenue totals have been on the decline for four straight years, though the company did turn an operating profit in 2017 for the first time since 2014.
Groupon continues to sell physical goods as part of its business model—and their presence at our CE Week Retailer Meetups event shows their continued commitment to that channel. But as they look to continue to boost profit margins, the company will start focusing more on its core digital voucher business, as the Recode report pointed out. That includes its partnerships with concert and entertainment company Live Nation and Major League Baseball.
During a call with analysts in May to discuss its first quarter results, Groupon CEO Rich Williams said the company has sold nearly 1.5 billion Groupons in the 10 years since it was founded.
"We are focused on establishing an indispensable marketplace that customers will use again and again," he said. "That's at the core of being a daily habit in local commerce and we believe we are well on the way."
Only question, then, is whether Groupon will continue to be “well on the way” as an independent company or as a line item for a much larger company. Some reports suggest that China’s Alibaba could be a potential suitor, which makes some sense considering they are already a minor investor, holding a 6 percent stake in the company.