Internet giant Google Inc, is close to making its biggest acquisition by acquiring online discount site Groupon, for an undisclosed sum that is being estimated at $5.3 billion with an additional performance bonus of $700 million to the Groupon management.

In October, rival Yahoo was rumored to have offered to buy Groupon for over $3 billion.

If the dealgoes through, it would be Google's biggest acquisition to date after it bought online ad provider DoubleClick in 2007 for $3.1 billion from private equity firm Hellman & Friedman.

The brainchild of its current CEO Andrew Mason, Chicago-based Groupon, which was launched in 2008, is an electronic commerce site that has its spread in more than 300 markets and 35 countries having more than 33 million subscribers, making it one of the fastest-growing companies in history.

The company, which had 2009 revenues of $350 million and is projected to surpass $500 million this year, already has a market value in the range of $5 billion to $5.5 billion.

Groupon operates a shopping website that offers a daily deal on local goods, services, and cultural events for businesses and consumers in the US. It provides daily deals on acupuncture, meals, opera tickets, tours, teeth cleanings, restaurants, theatres, spas, classes, sporting events, bars, museums, concerts, and gyms.

It makes money by getting a commission from the merchants, but unlike other online commerce sites, Groupon's retailers do not pay for marketing until they get a customer who buy the product or have initiated a deal through Groupon.

Google aims to get data about online purchases and local businesses, which would help it focus on generating revenues from local advertising.

Talks on acquiring Groupon by Google was first reported by News Corp-owned website All Things D, which had said that the Menlo Park, California-based Google had offered $5.3 billion for Groupon, plus incentives if it meets certain performance targets.