Another source close to Yahoo said much the same thing, but suggested the price was higher, north of $2 billion.

None of it adds up though. Groupon was valued at $1.35 billion earlier this year. A sale in the $2 billion range would mean that Groupon sees a major problem in their business model. Otherwise, they’d be in it for the long haul.

And in fact the information from these two separate sources is probably incorrect. A source close to Groupon tells me that there haven’t been any serious acquisition discussions with Yahoo at all, and for Groupon to even consider an acquisition would require $3.5 billion or more. Clearly, Yahoo would have a lot of trouble completing an acquisition of that size.

Also, we’ve checked with some of the other usual suspects who’d likely be bidding against Yahoo in a Groupon acquisition. They’ve not heard a thing.

We have confirmed that Groupon and Yahoo are working on a large distribution deal of some kind. A smaller deal is already in place, but something much bigger is coming in the next few weeks. Deals with eBay and Citysearch are probably also being signed.

But for now, no acquisition. Either because discussions never happened (most likely) or because Groupon management balked at being part of Yahoo.

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Authors: Michael Arrington

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