Groupon Raises More Than Half of $950 Million Round

Groupon Inc., the daily-deal coupon site based in Chicago, has raised more than half the funds in a financing round that could generate as much as $950 million.

The equity offering brought in more than $500 million, Groupon said today in a filing with the U.S. Securities and Exchange Commission. That leaves about $450 million remaining in the funding round, the company said.

Chief Executive Officer Andrew Mason is raising money after walking away from a $6 billion acquisition offer from Google Inc. on Dec. 3. The company is trying to maintain its lead over rivals such as LivingSocial, which received $183 million in an investment round led by Amazon.com Inc. earlier this month.

Those investing in Groupon include Digital Sky Technologies, Fidelity Investments and Morgan Stanley, according to the technology blog TechCrunch. The deal values Groupon at $4.75 billion, TechCrunch said. Digital Sky led an earlier round of financing in Groupon valuing the company at $1.3 billion.

A portion of the money raised is being used to buy back shares from existing stakeholders, according to the filing. Private companies must keep the number of shareholders below 500 or they are subject to reporting requirements by the SEC.

Groupon had been considering raising money from investors when it entered the talks with Google. Founded in 2008, the company may generate more than $500 million in sales this year, people familiar with the matter said earlier this month.

Deep Discounts

The daily-deal site offers discounts of as much as 90 percent from businesses such as restaurants, nail salons and clothing stores. It then keeps a portion of the revenue. The promotions activate once enough people sign up for them.

Julie Mossler, a spokeswoman for Groupon, didn’t return a phone call seeking comment.

Last week, Groupon hired Jason Child, Amazon.com’s former vice president of finance, to be its chief financial officer. That raised speculation that the company would press ahead with an initial public offering. The new funding round decreases pressure to do an IPO in 2011, said Greg Sterling, an analyst at Internet2Go, an advisory service that’s part of Opus Research in San Francisco. Eventually, the new investors will want a way to earn a return, he said.

“Ultimately, they need to go public unless somebody’s going to come forward with a super massive offer,” he said yesterday in an interview.

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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