It appears that Yelp is seeking to sell itself for $3.5 billion or more. The stock is way up on the news, which appeared in the Wall Street Journal. There’s no certainty that a sale will happen however.
To me this news communicates the frustrations and exhaustion of being a public company — as well as the recognition of potential growth challenges ahead. Accordingly, the company may be expressing that it doesn’t have confidence it can keep up with investor growth demands.
There may also be a “on the horizon” recognition that Facebook will probably be directly competing with Yelp, which could materially impact the company’s outlook. There’s equally a possibility that Facebook could be a suitor. Apple, Google, Microsoft and Yahoo as well as Priceline are likely on a short list of companies drawn up by the investment bankers probably working with Yelp.
There are potential others out there, such as private equity or Alibaba, that might be on the list too. The bankers and the company would want multiple serious bidders involved.
Yahoo is arguably the best fit but the price probably is too rich for the company. Apple is another good match but it takes the company in directions that it probably doesn’t want to go (e.g., local advertising). However Apple wouldn’t want Google to buy Yelp and withdraw all those reviews from Apple Maps.
Google will certainly take a hard look at this. It was once on the cusp of buying Yelp and it has tried with mixed success to obtain quality reviews content. Yelp’s 77 million reviews would certainly help. But $3.5 billion (or more) would be a massive premium to pay for reviews content — even this volume of content.
Facebook probably doesn’t “need” Yelp. While it could/would accelerate a local search offering it would potentially also complicate it because of the strength of the Yelp brand.
Another interesting angle here: how does a Yelp sale impact Foursquare? Foursquare is not formally for sale (as far as I know). However a sale of the NY-based company is the most likely outcome. Foursquare could emerge as a less expensive version of Yelp and could create an opportunity for the company to sell to one of the group of companies looking at Yelp.
What are your thoughts? Do you think Yelp will sell — why or why not? If so, who is the “best fit.” Who is most likely buyer?