Since the news broke this week that Yelp (YELP) had hired bankers to shop itself to other companies, let’s look at the possible buyers of the company:
- Yahoo (YHOO): No chance. Yelp’s market cap is now $3.5 billion. Meaning a buyer would have to spend considerably more than that to buy it out. Yahoo has $6 billion in net cash and most of that is promised to be returned to shareholders through stock buybacks in the future. They can’t afford it.
- Google (GOOGL): Little chance. There’s enormous bad blood between Yelp and Google dating back to when Google tried to scrape all of Yelp’s data from their site. Even though Google is nowhere in mobile, I think the history will be too tough to overcome.
- Apple (AAPL): Longshot. This would be a fairly big acquisition for Apple. They’ve also shown themselves to prefer taking a build it myself approach to Apple Maps (where this would likely fit). Still, there has always been a close relationship between Apple and Yelp. Yelp’s CEO Jeremy Stoppelman has attended many Apple keynotes over the years.
- Facebook (FB): Possible. Facebook has tried to create its own version of Yelp over the years. It hasn’t really worked. They’re not shy about buying users and a strong brand though.
- Amazon (AMZN): Longshot. I’m really not sure there’s a fit here. Better getting to know small to medium sized businesses doesn’t seem to be an Amazon priority.
- Priceline (PCLN), TripAdvisor (TRIP), or Expedia (EXPE): Possible but probably willing to pay less than a Facebook or others. I can see why any of these travel sites would want to own Yelp. I’m just not sure they’d be willing to pay up for them. It would be a big price for any of them. Someone like a Facebook would likely be able to outbid them. Of the 3, Priceline has the biggest market cap, so is most likely buyer.
- Alibaba (BABA): Possible. Could be a way for them to crack into the US market and get to know a lot of SMB businesses right away which they could hopefully convince to sell their goods on an Alibaba platform in the future.
- Rakuten: Best chance. They’ve been pretty undisciplined in spending money buying companies. Spending a boatload on Yelp to get into the US market could be right up their alley. They’ve got an $18 billion market cap so why not roll the dice.
Having said all that. I expect Yelp’s stock price to pull back a lot from here before a deal gets consummated.
Eric Jackson is the Founder and Managing Partner at Ironfire Capital LLC, which manages a tech-focused long/short hedge fund called Ironfire Capital and an early-stage tech seed and Series A focused fund called Ironfire Angel. Ironfire is an investor in Skift through its venture fund.