Groupon Inc. (Nasdaq: GRPN) executives are on the hunt for a buyer, and shareholders are asking, "Who will buy Groupon?"
Bankers who represent the company have aggressively been reaching out to several unnamed public companies in June, according to a Recode report.
Here's why they are trying to sell and who may buy...
What We Know About Groupon's Potential Sale
Founder and prior CEO Andrew Mason came up with the idea for Groupon after he ran into roadblocks trying to cancel a cell phone contract.
He believed that there should be a platform that leverages the collective buying power of the public.
By 2010, Groupon was in 250 cities across the globe and claimed 35 million registered users. As of Q1, it had 49.6 million users.
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But year-over-year revenue declined 7% in Q1 to $625.6 million thanks to the increase in online retailers offering deals and discounts
However, the user base could be a valuable addition for an e-commerce site. Groupon also has an impressive list of partners, which includes Jiffy Lube and Sam's Club.
On top of that, Groupon only has $230 million in debt with $725 million in the bank. If GRPN paid back its debt tomorrow, it would still have $495 million in cash.
That makes it an attractive acquisition.
And one of these three companies could acquire the $2 billion firm...
Here's Who Could Buy Groupon
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There are several potential suitors for Groupon.
Among them is Alibaba Group Holding Ltd. (NYSE: BABA).
BABA owns 5.6% of GRPN, so it wouldn't cost Jack Ma's company as much as another company to buy a controlling interest.
Amazon.com Inc. (Nasdaq: AMZN) is another possibility, although the chances of this happening are more remote.
Amazon once owned a third of LivingSocial, a former competitor to Groupon.
But it was acquired by GRPN for $0 in 2016 because of hacks and plummeting revenue, and Amazon shut down its own local deals business in 2015.
Another company to consider is Interactive Corp. (Nasdaq: IAC) because of its connections to Groupon. The company's CEO, Joey Levin, has been on Groupon's Board of Directors since 2017.
It would be a speculative trade to buy GRPN now, considering the company hasn't found a buyer.
But as we've seen with Amazon's acquisition of Whole Foods, companies are willing to pay a premium over what a company is currently worth.
That sends share prices higher.
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