After having made a number of acquisitions this quarter, Internet giant, Google is reportedly in talks to acquire the US start up business ratings and reviews site Yelp for over $500 million.

Based in San Francisco, Yelp is a privately held company founded in 2004 by two PayPal veterans, Jeremy Stoppelman and Russel Simmons, to help people find great local businesses like dentists, hair stylists and mechanic.

Businesses can setup a free account on Yelp to post offers, photos and messages for customers and anyone can review and rate the business. As of November 2009, Yelp had more than 26 million people visitors and Yelpers have written over 8 million local reviews with over 85 per cent of them rating a business 3 stars or higher.

The Yelp sites have listings for businesses throughout the US and Canada and the review site makes money by selling ads to local businesses. Businesses can post their advertisements like slide shows of photographs, which appear on top of search results and on the profile pages of competitors for $300 to $1,000 a month.

According to commentators, Yelp offers better local search advertising than Google Local. According to the research firm Experian Hitwise, with Google already directing about 54 per cent of Yelp's upstream traffic, the visits to the US review site rose 52 per cent last week, compared with the same week last year.

By acquiring the five-year old start up review site, Google will enhance its Place Pages site and its core search advertising business, which has slowed in recent years although the market for local online advertising is expected to surge from $2.1 billion in 2004 to $14.2 billion this year, according to research firm Borrell Associates.

The New York Times said late Saturday that although the two companies have held talks for many years about a merger, but this time around, the talks are said to be serious and both companies have come to stage where they have held detailed negotiations, including the price of the merger, but have not yet signed an agreement.

Yelp, which had raised $31 million in venture capital in 2008 from Benchmark Capital, DAG Ventures and Bessemer Venture Partners, and expected to have revenue of about $30 million this year, could be acquired by Google for more than $500 million, said the paper, citing a person familiar to the deal.

TechCrunch, the industry blog that first broke the news on Thursday evening, said that the acquisition price is around $500 million.

The biggest advantage that Yelp has over its larger rivals including Google, is its 300 sales force personnel, who go and sign up the untapped $29-billion market of small mom-and-pop run stores, which do not advertise online since they have stuck to the traditional paper phone directories, like the Yellow Pages.

The world's leading Internet search engine giant, which had 2008 revenue of approximately $22 billion, is looking to expand its local business market in the US. It has expanded its profile pages for local businesses, which include location and hours, maps and reviews from other Web sites.

The acquisition will expand Google's ability to connect advertisers with internet users in search of local restaurants, shops and other establishments since Yelp, which is also like a search service, but offers searches aimed at local businesses and users than Google's search engine.