Tim O'Shaughnessy, chief executive officer of LivingSocial, poses at the company's headquarters in Washington, D.C., U.S., on Wednesday, Dec. 8, 2010. Google Inc. is reportedly considering making an offer to buy the company after it failed to buy Groupon Inc., the world's largest online deals firm, earlier in December.

      After a failed attempt to purchase leading online deals firm Groupon Inc. for US$6-billion earlier in December, Google Inc. is reportedly now trying to cut a better deal for one of the company’s smaller rivals.

      According to a report published Tuesday in the New York Post, the world’s largest search engine is considering buying one of the other players in the Internet coupon providing space. Citing a “source close to the situation,” reporter Josh Kosman noted LivingSocial and BuyWithMe – possibly the second and third-largest online deals businesses in operation today behind Groupon – as being on Google’s shortlist.

      He reports LivingSocial as having a valuation of about US$1-billion while BuyWithMe is substantially smaller, with about US$20-million in annual revenues. Groupon, on the other hand, controls about 80% of the online deals market and has annual revenues estimated to range as high as US$2-billion for the private Chicago-based company.

      Groupon has been forging ahead on its own since declining to join Google. On Monday, the company hired former Amazon.com executive Jason Child to serve as chief financial officer; a move that has led many to speculate that Groupon may be preparing to launch an initial public offering within the next year.

      David Wolfe, interim president of New York-based BuyWithMe, declined to comment to the U.S. newspaper on whether he was in acquisition talks with Mountain View, California-based Google. Though he did say the technology titan should enter the online coupon advertising market in one way or another.

      To a certain extent, the size of the online deals service eventually acquired by Google is irrelevant. The web search leader’s vast global presence would allow it to bring such a service to markets around the world virtually overnight.

      Buying Groupon would certainly have given Google a jump-start, though after talking about it for so long, perhaps Google just needs to start.

Source from Financial Post