Groupon is reportedly weighing an acquisition of Yelp as pressure from frustrated investors mounts

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Groupon is reportedly eyeing acquisition targets as agitated investors complain about the company’s financial performance and stock price, according to the Wall Street Journal.
The company is considering buying online-review company Yelp, the WSJ reported. Shares of Yelp rose as much as 5.4% on the news.
Groupon’s stock price has fallen more than 10% this year, while the S&P 500 is up roughly 20%.
Watch Yelp and Groupon trade live.

Groupon is reportedly looking to expand its business through acquisitions to soothe investors frustrated with the company’s dismal financial and stock performance this year.

The Wall Street Journal reported that Groupon might look to purchase Yelp, the online-review company. Shares of Yelp jumped more than 5% on the news, while Groupon’s stock slid as much as 7%.

A marriage between Groupon and Yelp could generate more than $200 million in cost savings, according to the WSJ, which cited people familiar with the situation.

The merger would also create other synergies. For example, Groupon could leverage its coupons and deals business to offer incentives for customers to complete reviews, the WSJ reported.

Investors have been pushing for Groupon to find some way to increase its value, according to the WSJ. Activist fund managers have suggested stock-buybacks, strategic partnerships, or to fund a buyer for the struggling company.

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Groupon’s shares have underperformed the market significantly this year. The S&P 500 is up roughly 20% year-to-date, while Groupon’s stock has fallen more than 10%.

The company reported revenue of $532.6 million in the second quarter, down more than 13.5% from the same period last year. Profit dropped almost 10% to $292.1 million.

Groupon is now valued at just under $1.6 billion, a far cry from the $16.5 billion valuation the company achieved when it went public in 2011. Yelp’s market value is about $2.35 billion.

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Source:: Business Insider – Finance

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