WSJ: Groupon Eyeing M&A, Yelp Could Be The Target

With its shareholders uneasy about its financials and valuation, Groupon Inc. GRPN is pursuing an acquisition, The Wall Street Journal reported Wednesday. 

What Happened

Groupon could be interested in buying the San Francisco-based online review company Yelp Inc YELP, WSJ said, citing two people familiar with the situation. 

Groupon and Yelp would be a logical matchup, and the combination of the two would create a company with earnings before interest, taxes, depreciation and amortization of $900 million to $1 billion, according to the publication. 

Why It's Important

Groupon reported adjusted EBITDA of $47 million for its latest quarter, according to a July earnings release. Yelp’s adjusted EBITDA was $55 million at the end of June.

The Wall Street Journal quoted data from FactSet estimating that Groupon is valued at $1.71 billion, which is significantly less than the $16.5 billion it achieved in 2011, the year the company went public. Yelp is valued at $2.46 billion.

What's Next

If a merger goes ahead, it would create a combined online marketplace in which merchants could offer deals to customers and read reviews while also making reservations and buying goods or services online.

Groupon shares were trading higher by 2.33% at $3.08 in Thursday's premarket session. Yelp shares were up 2.31% at $35.40. 

Related Links:

Analyst Likes Groupon's Stock, With Or Without An Acquisition

Cannabis M&A: Therapix Biosciences, Destiny Biosciences Plan Stock-For-Stock Deal

Photo courtesy of Groupon.