UPDATE 2-Groupon files to raise up to $950 mln

Wed Dec 29, 2010 1:10am GMT

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* Groupon has authorized equity round

* VC Experts see valuation as high as $7.8 billion

* Comes after reports of talks to sell to Google (Adds possible valuation; comments from banker, analyst)

By Jim Finkle

BOSTON, Dec 28 (Reuters) - Groupon Inc, the fast-growing online coupon seller, has been authorized to raise up to $950 million in what would be the biggest round of equity financing by any company since Pixar in 1995.

The company said in filing with the state of Delaware that it intended to sell shares at $31.59 each.

That price would value Groupon at between $6.4 billion and $7.8 billion, depending on the number of shares issued, according to VC Experts, a research firm that specializes in providing data on private companies.

Groupon, with annual revenue said to range from $500 million to $2 billion, sends members daily e-mails with steeply discounted deals from local merchants. The deals are activated when a certain number of people agree to make a purchase.

Officials with Groupon, which serves U.S. and Canadian markets from New York to Sacramento, could not be reached for comment.

Groupon said in the filing that the shares shall automatically be converted into common stock if the company goes public.

The document, an amended and restated certificate of incorporation, was filed Dec. 17.

Described by some as the fastest-growing Internet start-up in history, Groupon's backers include Digital Sky Technologies, which also is an investor in Facebook.

The move for new funding comes a month after reports that Groupon was in talks to sell itself to Google Inc (GOOG.O) for up to $6 billion. Google's shares fell on those reports amid concern the web advertising company would be overpaying.

Michael Wolf, director of management consulting firm Activate, said that there may be high demand for the offering because Groupon is seen as a hyper-growth company whose best days are ahead of it.

"People look at it as a business that will be worth considerably more in the future," he said.

Several analysts say that Groupon needs to raise money to expand quickly because there are few barriers to entry in its field and rivals are fast approaching. The New York Post last week reported that Google is looking to buy smaller competitors LivingSocial and BuyWithMe.

"Groupon is probably looking to get out and build a moat around their operations as soon as possible," said Peter Falvey, co-head of tech banking for Morgan Keegan. "That's going to be expensive."

Justin Byers, head of business intelligence for VC Experts, said that the $950 million authorization was the biggest his firm had seen in at least 20 years. The recent record had been Pixar's 1995 authorization of about $500 million, he said. (Reporting by Jim Finkle; editing by Carol Bishopric)

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