Yelp
stock was surging Tuesday after an activist investor encouraged the recommendation website to explore strategic alternatives, arguing shares could more than double. Good luck with that.
TCS Capital Management owns more than 4% of
Yelp
(ticker: YELP), making it one of the biggest shareholders, and believes that Yelp could be sold for double the current share price, The Wall Street Journal reported. The size of TCS’s stake hadn’t been revealed before.
The fund’s president, Eric Semler, sent a letter to Yelp’s management with his recommendations to boost returns and said that TCS may make its own bid to acquire Yelp, the Journal reported,
“Yelp maintains an active dialogue with our shareholders and values constructive feedback on our business and ways to create value,” a company spokesperson said in an email early Tuesday.
TCS and Semler won a board seat at the online company
Angi
in 2016. The company was eventually sold to
IAC’s
consumer review site HomeAdvisor.
In the letter to Yelp, Semler said that combining Yelp with Angi would help double the value of Yelp’s shares. He also said that Yelp CEO Jeremy Stoppelman had been overcompensated by the business he co-founded in 2004.
Analysts at KeyBanc said that Yelp seems to get calls to sell itself every four years. It considered a sale in 2019 and in 2015.
“We struggle to see a list of public acquirers who have not already considered bidding on Yelp in the past,” strategists led by Justin Patterson said in a research note.
A $70 price tag could be hard to get, however. “We are curious to see what the latest argument for a sale and the list of suitors is, but our general view is that public companies are unlikely to be acquirers,” writes KeyBanc analyst Justin Patterson.
The market seems to agree. Yelp stock has gained 9.8% to $35.69 in premarket trading, about half TCS’s mooted price.
Write to Brian Swint at [email protected] and Ben Levisohn at [email protected]
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