One thing is certain about the Google– Yelp courtship: After turning hot as recently as Friday, a bitter chill has spread over the relationship, and for now, the mating dance is definitely off.
But why things fell apart after the two sides had virtually agreed that Google would pay upwards of $500 million to acquire Yelp has become a bit of a he-said, she-said.
As my colleague Claire Cain Miller and others have reported, some people with knowledge of the discussions said that Yelp walked away. The reason Yelp abandoned a seemingly sweet deal was never fully explained.
Now another person who was briefed on the negotiations said that it was Google that walked away. The person said that Google executives believed that their counterparts at Yelp weren’t being “transparent.” The executives also didn’t want to let the negotiations be driven by leaks to the press, the person said, implying that it was Yelp that had first leaked word of the talks.
Finding out who is right may take some time. But it can’t hurt to try to read the tea leaves.
It seems apparent, based on conversations with multiple sources, that after the two sides tentatively agreed on a deal, Yelp came back to Google saying it had received a higher offer from another party. Why Yelp didn’t take that offer, which the sources said was in the vicinity of $750 million, is a bit of a mystery. The people who said Yelp walked away from the deal implied that there wasn’t a good fit with the other company. However, as Anthony Alfonso, president of Trenwith Valuation, told Ms. Miller, some of Yelp’s actions may have been an exercise in brinkmanship.
But what if the brinkmanship backfired, and it is Google that walked away? If Yelp told Google it had a higher offer, then it seems it was Google’s turn to counter or to call the deal off and let Yelp go back to its unnamed suitor. The comment by Google executives about Yelp’s lack of “transparency” suggests that Google thought that Yelp sprung the higher offer as a negotiation ploy.
Google and Yelp declined to comment.
While people close to the deal are happy to point fingers over the apparent fiasco, there’s something that no one seems ready to say: That the deal is off for good. After all, we are not talking about high-school courtships here, but about a multimillion-dollar business deal. While it is apparent that feelings have soured, if an acquisition makes sense, it may still get done.