Alibaba is also interested in Groupon's group buying power. The Chinese firm his hungry to put right its deficiencies in this area, and even a minority stake of 20% to 30% could lead to a strategic alliance or joint venture with Groupon that saves Alibaba considerable development time. So this may not be the last Alibaba buys of Groupon.
News of the share buy comes after Groupon last week reported better than expected results for its fourth quarter of fiscal 2015 as well as an upbeat outlook, which caused its stock to soar 29%.
Last month Alibaba Group Holding Ltd. reported better-than-expected third-quarter results as it benefitted from a shift to mobile spending and growth in users.
The transaction also comes after news last Friday that litigants Pomerantz LLP had reached an agreement in principle to resolve the Illinois class action with Groupon, by calling for a US$45mln settlement. The settlement is contingent upon court approval.
Groupon shares hit a session high of US$4.23, rising by 46% on since the Friday close. US bourses were closed on Monday for a public holiday. Meanwhile, Alibaba shares were up 8.9% in New York at US$66.33.