Groupon set to ditch flotation plans

Online discount firm valued at $25bn puts plans for share offering on hold, executives tell Wall Street Journal Groupon, the online discount firm, is reportedly close to ditching plans to go public in one of the biggest share offerings to date from the new generation of technology firms. The Chicago-based company was scheduled to begin a roadshow next week, visiting potential investors ahead of what was one of the most hotly anticipated digital flotations. The firm had been valued at as much as $25bn. But according to reports those plans have been put on ice. The company did not return calls for comment, but executives told the Wall Street Journal that recent stock market gyrations had led to the decision to put the initial public offering (IPO) on hold. The leaking of a controversial email in which founder Andrew Mason blasted Groupon’s growing army of critics appears also to have caused trouble for the firm by angering financial regulators. Three-year-old Groupon offers daily deals for local businesses, and is, by some measures, the fastest growing company of all time. Google offered $6bn for the firm last year, only to be rejected as the valuation soared, driven up by its phenomenal growth rate and investors’ increasingly frenzied appetite for new dotcom firms. But as Groupon prepared the IPO, which had been expected as early as this month, criticism of the firm’s accounting and long-term prospects grew. The company was running out of cash, facing mounting competition from Amazon and others, and failing to make the grade in China, according to various reports. Mason fired back at critics in an internal email that was immediately leaked to AllThingsD , the tech site owned by the Wall Street Journal. The leak appears to have broken US financial rules that limit what executives in a firm planning an IPO can say ahead of the flotation. Sucharita Mulpuru, a Forrester research analyst and long-time critic of Groupon, called the decision “catastrophic”. “This has got to be the botch-up of the century,” she said. “What most surprises me is that they have done this to themselves. They seem to have come undone, Icarus-like, because they flew too close to the sun – and not because they were asking for too much money,” she said. Mulpuru said pressure would continue to mount on Groupon, and its chances of bringing an IPO or flotation in the near future were fading fast. “It’s all to do with timing,” she said. “It’s all about what this company could be. Every day that goes by is another day that they have to hit their numbers. This is not a business that is humming along smoothly. The pressures on it look great.” Mason founded Groupon in November 2008, and by last October the firm had 35 million registered users. But it has also burned through mountains of cash even as sales soared, losing $180m last year and a further $102.7m in the second quarter of this year alone. Scrapping the sale would be the biggest setback to date in the new dotcom boom. Companies including LinkedIn, the business-focused social network, and Zynga, the gamemaker behind FarmVille and CityVille, have all successfully gone public, while Facebook is planning what is expected to be the biggest IPO in the sector next year. But Groupon would have been the largest social media IPO to date, making Mason a multi-billionaire. Groupon IPOs United States Stock markets Dominic Rushe guardian.co.uk

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