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Yahoo Ready to Make Huge Offer to Acquire GroupOn

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November 10, 2010

Yahoo Ready to Make Huge Offer to Acquire GroupOn

By Beecher Tuttle, TMCnet Contributor

Yahoo has notified GroupOn executives that it is willing to spend $3 billion to $4 billion to purchase the thriving e-commerce coupon site, a source close to the situation told Business Insider.

The news comes only two weeks after several media outlets reported that Yahoo was not looking to acquire GroupOn, but was instead working to develop a partnership with the burgeoning deal-of-the-day website.

If the rumor is accurate, GroupOn officials will have quite a decision to make. Launched in 2008, GroupOn is one of the hottest startup companies on the planet. With 300 employees serving markets in nearly 30 countries, the Chicago-based company dominates the online group-buying space. Earlier this year, Forbes Magazine dubbed GroupOn "the fastest-growing company in Web history."

Following a massive round of venture funding, the e-commerce company recently garnered a valuation of well over $1 billion, making it one of the most attractive startup companies in the eyes of potential buyers.

Meanwhile, a separate source told Business Insider that GroupOn is scheduled to undergo a "semi-annual review," where it will examine all of its long-term options. The startup is apparently deciding between going public or raising more capital; however the informal offer from Yahoo could certainly change things. Other major players in the technology space, including Google, Amazon and eBay (News - Alert), have all been identified as potential suitors. GroupOn executives and investors have suggested several times over the past 18 months that they would highly prefer to remain independent.

For Yahoo, acquiring a burgeoning startup like GroupOn could be just the splash that the struggling company has been hoping to make since new CEO Carol Bartz (News - Alert) took over last year. Yahoo tried and failed to acquire several big name startups over the years, including YouTube, Facebook and most recently Foursquare.

Officials with Yahoo and GroupOn each refused to comment on the rumor.

Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf

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