Alibaba-Groupon Merger 'Likely,' Says Report

A new piece on youngchinabiz.com suggests there could be more to Alibaba Group Holding Ltd BABA’s relatively small 5.6 percent stake in Groupon Inc GRPN than initially meets the eye. According to the story, Alibaba’s stake in Groupon could be a test of the waters for a larger partnership in the future or an out-right takeover of Groupon.

“Alibaba is likely to enter talks to buy a strategic stake in Groupon or even make a bid for the entire company, following its disclosure that it has purchased 5.6 percent of the US company in the open market,” the article reads.

Related Link: How The U.S. Can Avoid Recession

Youngchinabiz points out that the timing of the Groupon stake is not surprising given that Alibaba has been selling off its stake in Chinese group buying site Meituan-Dianping because “it didn’t get along with top management at the company.”

Alibaba’s decision to sell its stake in Meituan-Dianping leaves it in a disadvantageous position in the group buying space. Rival Tencent is well-positioned to partner with Meituan-Dianping in the future, and Baidu Inc (ADR) BIDU has been investing heavily in its own Nuomi group buying site. In that sense, a strategic partnership or controlling interest in Groupon, which it certainly has the cash to afford, could fill a competitive void for Alibaba.

A spokesperson for Alibaba was not immediately available for comment.

Disclosure: the author is long Alibaba.