Wow. Not since Yahoo turned down Microsoft’s acquisition offer last year has the tech scene seen so much M&A drama. In a surprise move, Yelp’s board has rejected Google’s buyout offer of $500 million, citing its need to follow its fiduciary duty. This almost surely means that Yelp has received interest from another quarter.
The New York Times reports that this is, indeed, the case, and claims that the yet-unknown other party is willing to pay as much as 50% above Google’s offer for Yelp:
Yelp received interest from another company for a price of about 50 percent more than Google was willing to pay, according to a person who is close to the negotiations. That would put the price around $750 million.
This screams Microsoft, which is sitting on a lot of cash and has been known to overspend for a chance to get a piece of the social networking scene. (Remember its insane $15 billion valuation of Facebook three years ago?) Try as it might, Microsoft just cannot figure out how the hell to build a good social networking product.
Fiduciary duty, if narrowly interpreted, would lead Yelp’s board to accept Redmond’s higher offer– especially given the high premium Microsoft is willing to pay. The long-term interpretation of fiduciary duty, however, dictates that Yelp should run, not walk as far away from Microsoft as possible. What’s the last company that has flourished under Microsoft’s leadership? On the contrary, it seems that Microsoft suffers from that particular malady of not knowing what, precisely, to do with the companies it has overpaid to acquire.
A marriage of Yelp and Microsoft would yield some obvious synergies, including the integration of Yelp user content into Microsoft Maps and Bing, but this is merely a switching-out of search engines, as both functions are currently performed by Google. Care to see Yelp content filter into Microsoft Office? I don’t think so.
It’s easy to see what Microsoft gets out of this deal– a nice piece of the social media scene– something it hasn’t been able to figure out for the life of it. Hard to see what Yelp gets out of this deal except for a handsome payday.
via Yelp Turns Down Google, for Now – Bits Blog – NYTimes.com.
[...] disclosed that an unnamed suitor was willing to pay more than 50% above Google’s offer price. Some observers correctly predicted that the only company desperate enough to make such an offer was Microsoft, [...]