Market Overview

Is Yahoo Still The Leading Suitor For Yelp?

Is Yahoo Still The Leading Suitor For Yelp?

Shares of Yelp Inc (NYSE: YELP) continued to surge on Friday. Shares gained momentum Thursday after the Wall Street Journal reported the company is exploring a sale and has hired investment bankers to field potential offers.

The publication did not mention any specific companies that could be interested in acquiring Yelp.

Axiom Capital's Victor Anthony argued on Thursday that the list of potential acquires for Yelp is short. Anthony added he was "hard pressed" to see why Google Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) or Facebook Inc (NASDAQ: FB) would have any interest in acquiring the company. This makes sense, as both Google and Facebook offer a replicate service of Yelp's business review model.

Related Link: Yelp Skyrockets After Review Of Sales

Anthony continued that Yahoo! Inc. (NASDAQ: YHOO) could see revenue growth from a Yelp acquisition, but doing so fits poorly with its stated strategy.

Not The First Time Yahoo Presented As Potential Buyer

Tech Crunch reported in an article in 2010 that Yelp was in the final stages of negotiations to sell itself to Google for $550 million, but the deal was taken off the table after Yahoo reportedly offered $200 million more than Google had offered to acquire Yelp.

Yelp asked Google if to match Yahoo's offer, but Google declined.

Yelp's management team was apparently not interested in working for Yahoo. Regardless, Yelp's board of directors has a fiduciary duty to accept an offer that maximizes shareholder value, creating a conflict of interest between what is best for shareholders and management's wishes.

Interestingly enough, Yahoo's current CEO Marissa Mayer was an executive at Google during its failed takeover of Yelp.

Yelp's decision to continue operating as a stand-alone company appeared to be a smart move given its market share currently stands at around $3.71 billion.

Related Link: Axiom: Not So Many Bidders For Yelp

A few years later in early 2014, Re/code reported that "most intriguing" for Yahoo (and most pricey and therefore most unlikely) would be an acquisition of Yelp. However, shares of Yelp were trading above the $5 billion valuation mark – likely preventing a deal from happening, as Yahoo would likely have to pay a premium to the $5 billion valuation.

Yahoo Now Joins A Lengthy Line Of Potential Suitors

Estimize sent Benzinga a recent crowd update from the Mergerize platform. She noted that "the crowd had previously expected Yahoo to be the top candidate; however, more recently, traders have been predicting Google, Facebook and Apple Inc. (NASDAQ: AAPL) have been viewed as potential bidders.

Furthermore, Bloomberg reported that SunTrust Robinson Humphrey's Robert (Bob) Peck suggested on Thursday that shares of Yelp could be worth $66 per share in a takeout. Peck also added, Inc. (NASDAQ: AMZN), Priceline Group Inc (NASDAQ: PCLN), eBay Inc (NASDAQ: EBAY), Alibaba Group Holding Ltd (NYSE: BABA), Tripadvisor Inc (NASDAQ: TRIP) and privately owned Uber to what is now a long list of potential buyers.

Image Credit: Public Domain

Latest Ratings for YELP

Aug 2020Morgan StanleyMaintainsUnderweight
Jun 2020BTIGInitiates Coverage OnNeutral
May 2020BMO CapitalDowngradesOutperformMarket Perform

View More Analyst Ratings for YELP
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