Tech Investing

Groupon, Bankers Said Discussing 2011 IPO


(Bloomberg) — Groupon Inc., the largest coupon website, is seriously considering an initial public offering later this year and is meeting with securities firms interested in handling the sale, said two people familiar with the matter.

The company may hold an IPO as soon as mid-year, said one of the people, who asked not to be named because the discussions were private. While Groupon is choosing from as many as six banks, it hasn't retained one yet, one of the people said.

The IPO talks come days after Groupon announced a $950 million round of funding. The financing, said to value the company at $4.75 billion, attracted venture firms such as Andreessen Horowitz, Greylock Partners and Kleiner Perkins Caufield & Byers. The public offering would add to a war chest the startup could use to expand internationally.

Last month, Groupon Chief Executive Officer Andrew Mason spurned a $6 billion takeover offer from Google Inc., with an eye to taking the business public in 2011, a person close to the company said at the time. Groupon, founded in 2008, has more than 50 million users.

Julie Mossler, a spokeswoman for Chicago-based Groupon, declined to comment.

Groupon is one of a handful of multibillion-dollar Internet startups that could hold IPOs in the next two years. The largest, Facebook Inc., also held a recent financing round. It raised $500 million from a group led by Goldman Sachs Group Inc.

Venture Funding

Groupon has said that part of the $950 million will go toward letting employees and early investors cash out of their shares. Private companies must keep the number of shareholders below 500 or they are subject to reporting requirements by the U.S. Securities and Exchange Commission.

The company was already looking at raising more money from investors when it entered the talks with Google last year. Those discussions fell apart on Dec. 3 because of Mason's concerns that a takeover would sap morale and alienate business clients, a person familiar with the matter said at the time.

Groupon offers daily discounts of as much as 90 percent from businesses such as restaurants, nail salons and clothing stores. It then keeps a portion of the revenue. The company may have generated more than $500 million in sales last year, people with knowledge of the finances said.

While it leads the daily-deal market, Groupon faces mounting competition from rivals such as LivingSocial. That company received $183 million in an investment round led by Amazon.com Inc. last month.

Digital Sky Technologies, a Moscow-based investing firm, led an earlier round of financing in Groupon, valuing the company at $1.3 billion.

The business-news channel CNBC reported on Groupon's discussions with bankers earlier.

MacMillan is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.
Burrows is a senior writer for Bloomberg Businessweek, based in San Francisco.

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