The website that collects consumer reviews of everything
from dentists to night clubs is exploring a sale, according to people familiar
with the matter. The San Francisco-based company is working with investment
bankers and has been in touch with potential buyers in recent weeks, some of
the people said. With a market capitalization of $2.9 billion, the company
could fetch more than $3.5 billion in a sale. A deal isn’t imminent and it’s
possible Yelp will decide against a sale.
Yelp launched its initial public offering in 2012, pricing
above expectations, but the company has been trading down from highs in March
2014 when shares were trading around $97. On Thursday, before The Wall Street
Journal’s report, Yelp’s shares were trading around $39. After the news, shares
were trading around $41, up about 8%.
Yelp hosts millions of amateur reviews of shops, restaurants
and other businesses, giving the brand a foothold in the local side of
e-commerce that many web companies covet. Revenue comes from businesses that
pay to raise their profile with enhanced pages and advertising.
Yelp drew about 143 million unique visitors a month to its
website in the first quarter, according to the company’s latest financial
results. While traffic was up 8% from a year earlier, growth has slowed to the
reviews site, which in the first quarter of last year reported a 30% increase
in traffic. Executives last week said the company would stop detailing its
total visitors and instead would focus on separate tallies of desktop and
mobile users.
Higher spending on Yelp’s international sales force has so
far failed to reverse the slowdown in the number of people visiting the site.
Even as it struggles with growth, Yelp could be attractive
to a wide range of buyers beyond online review rivals. A deep base of reviews
can be a valuable asset because they take time to amass. Reviews are magnets
for smartphone users, valuable for companies seeking mobile growth. Also, a
website with a loyal following entices more users to visit the site directly,
allowing its owner to avoid paying for search engine advertising.
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