Yelp Reportedly Rejects Google’s $500 Million Acquisition Offer

December 22, 2009 0

San Francisco — Yelp has rejected Google’s acquisition offer, estimated at about $550 million. TechCrunch, which last week citing anonymous sources said a progressive discussion between Google Inc. to acquire Yelp, the popular review site Yelp was “very likely to close,” now says the deal is off– and that Yelp CEO and co-founder Jeremy Stoppelman “has walked out for reasons unknown”.

Michael Arrington of TechCrunch wrote that he is not sure what “went wrong that made Yelp turnaround from the deal. Over the weekend they notified Google that they are not interested to sell, say multiple sources.”

Rather, the sources said that news of the discussions might well have been deliberately leaked — and exaggerated — by Yelp insiders or backers, either to initiate a bidding war or to improve the valuation in a forthcoming venture capital round. The latter is the apparent rumor in banking circles.

The online punditocracy theorizes that Yelp feels it may not need Google. Yelp designates itself as the leading U.S. local guide and an acquisition would have given Google a local sales channel. Observers believe Yelp may have rejected Google to consider a better deal from another suitor or even an initial public offering of stock.

After news appeared last week that Google was bidding about $550 million for Yelp — in what would have been its sixtieth acquisition since 2001 — the startup has done a turnaround and rejected the search giant’s offer. The San Francisco, Calif.-based Yelp told Google over the weekend that it was no longer entertaining an acquisition offer, according to published reports.

According to many industry observers like Jared Newman from PC World states that Yelp already enjoys outstanding Google love in search rankings, so what is to gain by going in-house? Caroline McCarthy at Cnet theorizes that Yelp, which is so proud of its community, feared that the almighty Google’s track record in this arena is, surprisingly, less than stellar. Yelpers, she noted, hated the idea, and “YouTube’s commenter’s seem to come from a very special place somewhere between the sixth and seventh circles of hell.”

Both Yelp and Google are pretty secretive about the deal gone sour. “Yelp is not able to provide comment on private discussions,” said Stephanie Ichinose, a Yelp spokesperson, in an e-mail — although she did say, “as a fast-growing, local business review site with more than 8 million user reviews and more than 26 million unique monthly visitors, Yelp is approached frequently by numerous entities to discuss partnerships, investments and more, and the company does not comment on private discussions that may occur.” She declined to comment further today.

Acquiring Yelp would have given Google access to Yelp’s more than eight million customer reviews.

“Given the importance of local search and the ability to find what is nearby and what is good, the Yelp/Google deal would have made sense,” said Interpret analyst Michael Gartenberg. “Given that we do not know the actual numbers or terms, it is hard to judge the proper merit of a deal based on rumor.”

Google’s Andrew Pederson said: “Although we are always talking to various companies about various things, we do not comment on rumor or speculation.”

Sure enough, Yelp has some precedents in the move. Facebook and Twitter have magnificently spurned overtures for acquisition for even more money. Now the news over the coming weeks should shed light on what was really happening all along.