Activist investor TCS Capital Management has urged Yelp Inc (NYSE:YELP) to explore a sale or a merger with online-services company Angi Inc. TCS Capital, one of Yelp’s largest investors with a stake of over 4%, believes that a merger with Angi could create a major player in the $500 billion home services market. Shares of Yelp rose 10% in premarket trading following the announcement.
Yelp provides a platform for user reviews on local businesses from restaurants and dentists to mechanics, while Angi helps customers with repairs and renovations and other home care needs. TCS Capital founder Eric Semler believes that a combination of the two companies would yield enormous revenue synergies and cost savings that could double the value of Yelp’s shares.
Yelp’s market valuation stood at about $2.1 billion, about $500 million more than Angi’s, as of last close. Shares of Yelp have risen 47% since going public in early 2012, while the benchmark S&P 500 index has more than tripled in the same period. The company is witnessing strong demand for its advertising products, with revenue rising 13% in the last reported quarter and Yelp raising its full-year net revenue outlook.