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Groupon shares up on Alibaba takeover talk

Online special offer firm Groupon saw shares surge over 6% in pre-market deals after reports emerged that Chinese e-commerce giant and rival Alibaba might mount a takeover bid...
Groupon shares up in pre-market on Alibaba takeover talk
Groupon offers a raft of discounts and offers online...

Online special offer firm Groupon (NASDAQ)  saw shares surge over 6% in pre-market deals after reports emerged that Chinese  e-commerce giant and rival Alibaba (NYSE:BABA) might mount a takeover bid or buy another stake in the firm.

It comes after earlier this month, Alibaba revealed in a regulatory filing it had bought 33mln shares in the firm - taking it to owning a 5.6% stake and making it the fourth largest shareholder.

Conglomerate Alibaba has plans to further expand overseas and Groupon currently operates in 28 countries, albeit that is down from a peak of 45, so the rationale behind a potential deal is there.

Alibaba is also reportedly interested in  Groupon's group buying power

The Chinese firm is 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.

This month, Groupon has also reported better than expected results for the  fourth quarter of fiscal 2015 as well as an upbeat outlook, which prompted the shares to go north by almost 30%.

The Chicago-based e-commerce marketplace reported revenues of US$917 million in the fourth quarter, up nearly 4% compared to the fourth quarter of 2014 BUT IT posted a net loss of US$46.5 million, swinging from an US$8.8 million profit in the same three months of 2014.

For the year, Groupon posted US$3.1 billion in revenues, up from US$3 billion in 2014 and net earnings were 3 cents per share.

As well as improving the customer experience, new chief executive Rich Williams said his priorities were better customer acquisition, getting out of low-margin international markets and building a higher-margin goods business.

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