Yelp spurns Google--or is it the other way around?

Local business review site Yelp has reportedly walked away from acquisition talks with Google, although The New York Times reports that Google instead pulled its $500 million-plus offer after executives believed their Yelp counterparts weren't being "transparent." Word of the proposed deal first emerged late last week---citing three sources with knowledge of the deal, The New York Times reported Google first held acquisition talks with Yelp several years ago, but the discussion grew more serious in the last two months. Now the NYT reports that talks broke down over the weekend after Yelp received interest from an unspecified suitor willing to top Google's offer by about 50 percent, translating to a deal somewhere north of $750 million. "The board was precluded by fiduciary obligations from accepting the Google offer," said a source briefed on the events, although another source adds Yelp is not currently considering selling to another firm because the allure of the Google deal was not only the price tag but also the business synergies between the two firms.

A follow-up NYT article posits that negotiations instead fell apart after Google questioned Yelp's openness at the bargaining table--specifically, Google reportedly believes that Yelp itself first leaked word of the talks. There are also questions about why Yelp is turning down the second suitor's rumored $750 million offer, and speculation that Google believes Yelp sprung the higher price tag as a negotiating tactic. Both Google and Yelp declined comment.

Yelp--founded in 2004 by PayPal veterans Jeremy Stoppelman and Russel Simmons--offers user reviews and related social commerce tools spanning local businesses across the U.S. and Canada. Over 25 million consumers access the service each month, and the startup is expected to generate revenues topping $30 million in 2009, driven by ad sales. In addition to its mobile website, Yelp also offers smartphone applications optimized for the iPhone, BlackBerry and Palm Pre platforms as well as Google's Android operating system.

For more on the Google/Yelp talks:
- read this New York Times article

Related articles:
Google snaps up AdMob for $750 million
Google furthers content ambitions with own Android phone