It was actually smart. Groupon wanted a hefty break-up $5B fee. Google refused. Groupon must have known that the deal would never pass muster at Google after real number crunching. Hence they refused. With the break-up fee they would have still made like bandits.
The break up fee was to protect against the gov't blocking the acquisition due to antitrust concerns as far as I know. Pretty sure the business diligence was already complete by that time.
"I think the holdup on GOOG/Groupon deal is size of break-up fee if Gov't blocks deal," wrote Venrock venture capitalist David Pakman in a Twitter message early December 3.
