Groupon revises IPO valuation to less than $12.5 billion: Report

Groupon Inc. plans a scaled-back initial public offering of less than 10 percent of the discount-deal company at a valuation of less than $12.5 billion in light of recent market volatility and the company's missteps, according to people familiar with the deal.

The size of the sale, expected to be completed in the next two weeks, could be $500 million to $700 million under plans to be disclosed in advance of the company's roadshow beginning in the next few days, the people said. The size is meant to cut the amount of stock being sold at what may be a knock-down valuation, in hopes that more shares can be sold later at higher prices.

Although valuations of $20 billion to $30 billion were bandied about by outsiders at the time the company filed its plans to go public in May, the current goal of less than half that reflects the reality that the IPO window was closed for nearly two months between mid-August and mid-October because of overall stock-market weakness, and missteps by the company itself.

Groupon in August was forced by regulators to pull an unusual accounting metric called "adjusted consolidated segment operating income" from its offering materials. In late September, it had to cut its reported revenue in half to satisfy questions from the Securities and Exchange Commission. Its chief operating officer also departed last month.

One person familiar with the matter said that the company has decided to sell less stock because of the market volatility. The company has decided to sell a smaller number of shares because it is better to sell some shares now, rather than cancel the IPO and losing out on any fundraising opportunity, the person said.