Google's Investors Nervous About Groupon Bid

Share

groupon

Google’s bid to acquire Groupon could go through as early as this week.

Google has offered the group buying site Groupon $5.3 billion, with the promise of $700 million in performance bonuses for management. The bid for Groupon is an aggressive move by Google to dominate local online advertising. It also will help the giant with its long sought after move into social networking.

If the deal goes through, this will be Google’s largest acquisition to date, and this has some investors worried. In addition to the high price, there are also doubts surrounding hoe effective the company actually is at generating sales for merchants.

That said there are a number of compelling reasons for Google to want Groupon. The success of the site has largely come from deal hunting consumers willingness to mobilize their personal networks through Facebook and twitter. One staggering example of how effective this can be is the Gap promotion that ran in North America over the summer and generated $11 million in revenue in one day. This viral element of Groupon’s business is the much needed boost Google needs to make social networking work for them. Groupon would also help Google expand into local advertising and give them insight into consumer spending habits.

However, despite this obvious value to Google, investors are sure to be questioning whether or not this bid is over inflated?

LauraScott