Print | Share | Reprint

Google dines on Zagat

by Mary Kathleen Flynn | Published September 8, 2011 at 3:19 PM

After nearly two years of failed attempts to secure a high-profile target in the fast-growing online local space, Google Inc. on Thursday, Sept. 8, unveiled the acquisition of Zagat Survey LLC, the publisher of the ubiquitous urban guides to restaurants, bars, hotels and shopping locations.

The deal follows on the heels of Google's August announcement that it would pay $12.5 billion to buy Motorola Mobility Holdings Inc. in what will be the largest transaction in the Mountain View, Calif. company's history if it survives a Department of Justice review.

New York-based Zagat, which counts Allen & Co., General Atlantic and Kleiner Perkins Caufield & Byers as investors, had hired Goldman, Sachs & Co. to find a buyer in 2008 but eventually took itself off the market, with observers concluding its asking price of more than $200 million, or more than 20 times Ebitda, was unrealistic. Google declined to disclose what it paid for the publisher.

For Google, the deal is designed to bolster its revenue from local businesses.

"Moving forward, Zagat will be a cornerstone of our local offering," said Marissa Mayer, Google's vice president of local, maps and location services, in a blog post announcing the purchase.

Founded 32 years ago by Tim and Nina Zagat, the company publishes reviews that feature excerpts from customers. "Their surveys may be one of the earliest forms of UGC (user-generated content) -- gathering restaurant recommendations from friends, computing and distributing ratings before the Internet as we know it today even existed," said Mayer, who added that the pocket-sized guides were "'mobile before 'mobile' involved electronics."

Zagat also sells a mobile application that can be used on devices including Apple Inc.'s iPhone and iPod Touch and Android and BlackBerry smartphones.

Google plans to collaborate with Zagat to bring Google search and Google Maps to Zagat's products and users, Mayer said.

The local market has long been coveted by Google, which has succeeded in signing some deals in the sector recently. Earlier this summer, the search giant entered into a two-year agreement with Local.com Corp., which operates a large network of local services, to implement advertising and search services. And last month, Google acquired The Dealmap, which aggregates daily deals and displays them on an onscreen map, for undisclosed terms.

But its biggest attempts to buy into the local market have failed famously. In late 2009, Yelp Inc., the San Francisco pioneer in user-generated online restaurant reviews, reportedly turned down a $500 million offer from Google. And last year, e-coupon provider Groupon Inc. -- which was due to begin its initial public offering roadshow next week but has cancelled amid an uncertain economy and questions about its accounting practices -- reportedly passed up a $6 billion bid from Google.

Share:

Telecom, Media & Technology

Google dines on Zagat

Free preview

Meet the journalists

Mary Kathleen Flynn

Senior editor, technology software & the Internet; video producer

Movers & Shakers

Video

Coming back for more

Sectors