The only thing I read which made sense was that the acquisition offer could have included performance requirements that the Groupon team knew they couldn't meet.

Google's not stupid and wouldn't spend $6bln on something as risky as Groupon without some safety nets.

At the time, reports were that Google was offering $5.3 billion with $700 million in earnouts based on performance. Google was obviously front-loading the deal so performance wasn't as big of an issue. Google just wanted to get their paws on Groupon's network of relationships with local merchants. I imagined Google pushing local deals through adwords, or complementing the inbox deals with Gmail ads, or targeted deal commercial prerolls on YouTube videos. I bet Google didn't really care about how they performed, because they wouldn't need to be profitable on their own inside Google, they'd just need to drive more ad traffic across all properties.

I think it's more a case of buying their own hype. I think they actually thought they were revolutionizing local marketing. They looked at their huge (but unsustainable) growth numbers and thought they could spend their way to a sustainable dominant position.

Generally people interested in buying something from you will take some time to fully understand what they are purchasing. You don't offer $6 billion for a company without taking a peak at their books.