Excuse my ignorance but at what stage in an acquisition do you have to open your books to the acquirer? Any chance that they didn't want to give google this opportunity?
I'm guessing what others have said is right: Groupon management figured they could get more value by pushing for an IPO. They're likely right, although I can't see Groupon surviving long afterwords. If Google had bought them, then it had a chance to be a long term company. Now, it's an excellent investment for the founder and early investors, and the public will get screwed.
edit: on the other hand, what if google was buying the fleshy sales people? what if that is what they wanted? I mean, groupon is doing okay at penetrating the small local business market in a way that google isn't.