Details on the Groupon (GRPN) and Yelp (YELP) merger reportedly have been finalized since Monday morning of this week.
With Groupon stock plummeting in February, the CEO said that “profound change” was needed. This was the first time that the possibility of a merger with Yelp was discussed.
Most analysts agree that the merger makes perfect sense, and is a great way to quickly add company value and increase potential for share holders. In a world with increasing demand for online-to-offline transactions the Groupon Yelp merger makes perfect sense. Given the customer base of the two the marketing possibilities are tangible and exciting. Analsyst also seem to be in agreement that this merger won’t leave shareholders out to dry like other stocks have recently.
According to Today’s Five investigate reporters, the Yelp Groupon merger will be publicly announced by late June. The merger is expected to benefit all share holders involved.
While it’s not one of the three winners of the week, Groupon (GRPN) just got a lot more interesting.
On June 10th, Groupon (GRPN), in preperation for the Groupon Yelp merger announced a 1-20 reverse stock split.
What Does The Reverse Stock Split Mean For Groupon Share Holders
“The reverse stock split will become effective at 5:00 p.m. Eastern time on June 10, 2020. At the effective time, every 20 issued and outstanding shares of the Company’s common stock will be converted and combined into one share of the Company’s common stock, and a proportionate reduction will be made to the Company’s number of authorized shares of common stock.
Beginning with the opening of trading on June 11, 2020, the Company’s common stock will trade on the Nasdaq Global Select Market on a split-adjusted basis under a new CUSIP number, 399473206. The Company’s trading symbol will continue to be “GRPN.” – Source
Essentially your shares will decrease in quantity, and increase in value. In the end it will be the same. Imagine if instead of having two 1/16th’s of a pizza, I give you one 8th of a pizza. If you have $100 worth, it will still be $100 worth. Instead of 100 shares for $1, you would have 2 shares for $50. It just is a way for Groupon to safely keep the share price above $1 and keep it publicly traded before the Yelp Groupon merger.
Companies finding ways to remain above $1 until deals are finalized is a common practice.
What Does The Groupon Yelp Merger Mean For Share Holders
“It is reasonable to conclude that a relatively large acquisition by Groupon is forthcoming,” said Robert Chapman, founder of California investment firm Chapman Capital LLC, which had been building a stake in Groupon in recent weeks.
The target could be Yelp Inc., the San Francisco-based online-review company, according to two other people familiar with the situation. Groupon and Yelp would be a logical matchup and a combination of the two would create a company with earnings before interest, taxes, depreciation and amortization of around $900 million to $1 billion, these people said.” – Source
Basically, it means hold your shares. A Groupon Yelp merger is good news all around. As mentioned above, public announcement expected this Friday.