Report: Google offered $5.3B for daily deal site Groupon

Hot off the heels of an oft-criticized $700 million acquisition of flight-data provider ITA, search giant Google might now end up purchasing daily-deal provider Groupon for $5.3 billion, according to a report by AllThingsD. That comes just after reports of a buyout of the site for a mere $2.5 billion — less than half of what the latest reports indicate.

The daily-deal space has exploded thanks to sites like LivingSocial and Groupon. Both Groupon and LivingSocial, as well as a host of imitators, now offer deeply discounted offers for services, meals, and group activities from local merchants who have previously struggled to reach new customers online.

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Rather than relying on algorithms or some new sophisticated technology like most startups focus on, daily deal sites have grown swiftly as a result of a more human-centered approach. Local merchants that pair with city planners and writers who curate deals and market them with old-fashioned if well-written emails have ended up handling a bulk of the promotion.

Groupon is the largest, and most well-known, daily deal site on the Web. It was valued at over $1 billion following a large round of funding in April. A report by the New York Times indicated the Google-Groupon deal could be worth as much as $6 billion.

AllThingsD reported a few weeks ago that Google and Groupon were in talks, which sparked countless follow-up rumors. At the time, we argued that a Google buyout would be terrible for Groupon because the search giant lacks a human touch. The newest offer also follows reports that Yahoo tried to purchase Groupon for as much as $4 billion, after rumors from earlier this month that the deal site was after more funding that would value it at $3 billion.

As is the case with all deals, this one could fall apart before it sees the light of day. But the deal does make some sense, just like how Google’s $1.65 billion YouTube purchase makes more sense now than it did in 2006.

Purchasing Groupon could easily pay off for Google down the line. Google is also poking around a bit in the online shopping space as well, after it recently launched fashion site Boutiques.com.