Groupon Inc hopes to raise about $540 million in an initial public offering (IPO), bringing down its previous hopedamount. The downward size of the amount is caused by the struggles a weak equity market, executive departures and questions about its accounting and business model.
A regulatory filing revealed that the daily deals website company is aiming to sell 30 million shares, or less than 5% of the company, at between $16 and $18 each.
Last year Google offered to pay $6 billion to buy the firm. The downgraded midpoint valuation of 10.8 million is still far more than the offer, though less than initial valuation of $20 billion.
Analysts are predictying continued struggling time for the IPO despite the lowered valuation. It is expected to come to market in early November. Analysts are concentrating on the questions over the long-term viability of a business that faces fierce competition and low barriers of entry.
Groupon inspired considerable mistrust by changing its accounting twice under pressure from regulators and losing two chief operating officers this year.
Josef Schuster, founder of Chicago-based IPO research and investment house IPOX Schuster said, “This offer strikes me as very, very unattractive. I think it’s over-valued.”
He predicted that more shares will be out in the market after the scaling back of the size of the IPO and the small float. About $480 million to $540 million will be raised by the IPO as compared to a previous target of $750 million.
The success of this deal will dictate the good fortune of other companies going public like social gaming company Zynga and online social network Facebook.