Could Alibaba be gunning for Groupon? As numerous outlets have noted, the eCommerce firm has acquired a 5.6 percent stake of Groupon, doing so through the open market, and Groupon learned of the buy through regulatory filings disclosed just last week.
Speculation in the financial media has centered on whether Groupon may be a strategic investment or whether Alibaba may, in fact, be looking to take the company, lock, stock and barrel, through complete ownership. Forbes said that a wholesale takeout may not be “that preposterous.”
Would it be such a stretch? The stake may even have been increased, as the regulatory filing itself only details data from the end of 2015. The filing, as per rules with the Securities and Exchange Commission, was triggered by the stock buys crossing the 5 percent threshold.
In response, Groupon shares jumped by about a third. Nonetheless, Groupon’s niche in group buying, faded here in the United States, may be of interest for Alibaba, which Forbes noted is in the middle of getting out of its ownership of local group buying site Meituan-Dianping. Alibaba owns about 7 percent of that company and reportedly wants to part with it over several disputes related to its strategy. Should it indeed lose that ownership, it would be at a competitive disadvantage in the group buying market, where competitors do have presence — notably, Baidu, which has been investing in Nuomi’s group buying presence.
Another scenario for the two companies would involve Alibaba boosting its stake, with a conversation opening up between the companies leading up to a joint venture. A joint venture would give Alibaba access to Groupon’s insight into building a discount buying platform, without the need to subsume the whole firm, even if a $1.8 billion market cap is imminently digestible for Alibaba.