Mountain View, California — According to various media reports suggesting that Google Inc., world’s most popular Internet search engine, is making a bid to acquire the popular San Francisco do-it-yourself review site Yelp Inc., the site that allows users to review restaurants, bars, shops and more, potentially providing the search giant an opportunity to reach deeper into the local business market for more than $500 million, a person familiar with the discussions said.
The two companies have held discussions in the past, but serious talks about a deal are believed to have started several months ago. According to Technology blog TechCrunch and the New York Times quoting marked the discussions as “advanced” and “serious,” respectively, quoting anonymous sources with knowledge of the deal.
Both Google and Yelp declined to comment.
Google, which agreed to buy AdMob Inc. for $750 million last month, may shell-out more than $500 million for Yelp, according to reports confirmed to Reuters by a person familiar with the situation.
It looks as the Web giant has embarked on an acquisition spree after a lull during the recession. The company has netted at least six deals this year, with five coming in the past two months.
Yelp — based in San Francisco, is one of the most favorite user-generated review sites, which carries out reviews of restaurants, mechanics, dentists and other businesses in the US, with more than 8 million reviews covering businesses all around the country, would give Google a new source of local content.
Google, for its part, has been increasingly accelerating the pace of takeovers as it attempts to add ways of generating revenue from online advertising while taking advantage of asset values diminished by the recession. It has already become a major player in the sector, but is widely seen to have struggled to dominate in the same way it does in the wider web search market.
“Acquisitions are back on,” Chief Executive Officer Eric Schmidt, 54, said in September. The company had about $22 billion in cash and short-term investments at the end of last quarter.
By engrossing the privately held Yelp, Google could own one of the Web’s most popular repositories of local restaurant and small-business information, including more than 8 million reviews penned by Yelp’s users.
Google has mastered the art of matching keyword searches to ads for online transactions. With the abundant trove of content and a heavy focus on local businesses could provide a valuable foothold for Google as it seeks to convince local merchants to shift their advertising spending to the Internet.
“The local advertising market is a multi-billion dollar market that for all intents and purposes is still untapped on the Web,” said Needham & Co analyst Mark May.
Yelp is anticipated to produce between $30m and $50m in revenues this year, and could provide the Silicon Valley giant with a new — and more social — way of providing information to people about their local area.
A spokeswoman for Yelp, in a statement said that the company does not comment on rumor or speculation.
“In a world looking for high-value eyeballs, it is hard to find any higher value ones than these,” said Rob Enderle, principal analyst with the Enderle Group.
He did not have any knowledge of the talks and stressed that rumors are sometimes spread by companies hoping to be acquired, or their financial backers, to build interest or ignite bidding wars.
The privately held company was established five years ago by a pair of PayPal executives and quickly developed into a popular forum for users across the nation to laud and lambaste their restaurant service, bar selection and even the scenery on hikes.
“Among some Yelpers, the elite squad, I think there would be some ambivalence about becoming part of a large company like Google,” said Greg Sterling, founding principal of Sterling Market Intelligence. “There might be reason to believe that Yelp would lose some of its luster, some of its edge, some of the factors that make it a community.”
For the growing San Francisco company, a takeover by one of the hottest technology companies may mean many things, some good and some bad. At the price being discussed, it is sure to mint a few millionaires. And the scale and resources of Google could quickly transform the site into a global operation.