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Groupon, Inc. (GRPN) Message Board

  • karenlinsbux01 karenlinsbux01 May 8, 2013 10:26 AM Flag

    Take Over Target

    Even so, that's enough cash to sustain 18.5 quarters (4.6 years) of continuos losses of that magnitude. Moreover, it makes GRPN a high value take over target given that its current market cap is only $3.6 billion. Factoring in the $1.5 billion it has in cash (with no debt), paying $3.15 billion (based on a 50% buyout premium) for GRPN is quite an attractive investment. Remember Google had offered $6 billion for GRPN before the company went public. That a 90% premium ON TOP OF THE 50% buyout premium assumed above. Current market value of GRPN is $2.1 billion (after subtracting its $1.5 billion cash in hand). A company like GRPN is better off selling itself to a larger player like Google, Yahoo, or Amazon. Those companies already have ventures in the daily deals space and GRPN would bring a lot of synergies at a relatively low price. Once GRPN can prove itself to be cash flow positive for a couple quarters, companies will be bidding to gain from synergies. Long term, don't worry about the ebbs and flow. This could go from its current price of $5.39 down to $4 (but not much lower) to $8 (not much higher), but ultimately some sort of bid will take place for GRPN. It clear management does not have a clear idea of how/where to take this firm, but that doesn't mean there isn't plenty of value in GRPN for another (much larger) player.

    Sentiment: Hold

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    • then why GOOG didn't buy now @6 bln.
      why they change there minde?

      Sentiment: Buy

      • 1 Reply to mgvidpro
      • Groupon rejected Google's $6 billion bid three years ago, but given that the founders have now realized the difficulties of running a multi-billion dollar company successfully (which made sense at the time because the company later went public for a valuation of twice that amont). However, given the current state of the company's relationship with its shareholders and the lack of conviction by management on the direction the company wants take the firm, I believe any reasonable offer ($4.5-6 billion) for a buyout would be taken much more seriously. Just be patient and hold. You have to realize that GRPN as a standalone is worth much less to everyone, selling itself to a large firm is a win-win situation. Clearly, this is a space that is here to stay. GRPN is clearly a leader within that space, currently priced at a steep discount. I believe if we have positive earnings today, GRPN will have an offer within 9-12 months.

        Sentiment: Hold

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