Potential Disruption As Major Local Sites On the Block or Being Shopped
May 11, 2015 | Contributed by: Greg Sterling
There’s something interesting and even strange going on in the local market. Multiple companies are in transition or for sale at once.
Last week I was caught off guard when the Wall Street Journal wrote that Yelp was exploring a sale of itself for more than $3.5 billion and had consulted investment banks already. I saw this as public-company fatigue and also a negative statement about the ability of the company to keep up with the growth demands of institutional investors.
Nokia’s HERE is also for sale and could be bought by Uber, which reportedly has offered $3 billion for the mapping unit. There are a range of other potential buyers as well.
On top of that there have been ongoing rumors of acquisition talks involving Foursquare, which is very unlikely to go public and so eventually must sell (to someone) to deliver value to investors. I have always believed that Foursquare fills in a big blank for Yahoo but so far that prediction has been off.
In addition, in the past two weeks Angie’s List CEO Bill Oesterle announced he would be stepping down. There isn’t any indication the company is for sale but it does reflect Angie’s List ongoing struggle to grow against the backdrop of a more challenging competitive landscape.
Add to all that the rumor that Salesforce is for sale. Although Salesforce doesn’t specifically play in the “local market,” the sale rumors contribute to the strange atmosphere of multiple large internet brands being in play at once.
It will be very interesting to see to whom these companies sell and for how much. Historically the buyer in these scenarios often fails to invest or maintain the brand and its assets with the same vigor as the company itself prior to the acquisition. This in turn creates opportunities for secondary players or new market entrants.
I’m very curious to see what will happen with Foursquare. Foursquare is doing lots of sophisticated things with local search and discovery but hasn’t developed the brand strength of Yelp. Indeed, even more intriguing to contemplate is Yelp’s potential fate and future. It may remain an independent public company but the fact that the news leaked to WSJ indicates that somebody wanted to get the word out and potentially generate more demand — and competition among potential buyers.
Yelp and Foursquare, which are very similar properties, are thus potentially in the market at the same time. How that affects the calculus of any or all would-be buyers is interesting to consider: does each weaken demand for the other or do they mutually boost interest in the sector?
Adjacent to local, the travel vertical has been busy consolidating for the past year or so, with multiple acquisitions including Kayak, Orbitz and Travelocity. Priceline, which owns Kayak, also recently bought OpenTable. Priceline is one of the rumored potential buyers for HERE as well.
While there’s regular M&A activity and perpetual “disruption” happening among internet companies, somehow this feels like a more tumultuous time — especially for local. As I previously wrote, there appear to be structural shifts happening in the market: mobile, booking/payments, programmatic, indoor location and the increasingly sophisticated uses of location data.
What are your thoughts about any of these issues? Do you think Yelp will sell? What about Foursquare and HERE — and to whom?
Update: This morning Verizon announced that it was buying AOL for $4.4 billion. That means, in addition to everything else, that Verizon is now in the local search business and will own Mapquest among other properties.
The deal is subject to regulatory approval but should close later this summer.