As technology companies are eyeing M&A transactions that are believed to strengthen their localized content services, San Francisco-based social networking and micro-blogging company Twitter Inc. acquired Mixer Labs, a technology company that helps software developers build geolocation applications. Terms of the transaction were not disclosed.

Formerly known as TownMe, the San Mateo, California-based startup was founded by chief executive officer Elad Gil and Othman Laraki, both former product management executives at Google. Mixer Labs enables Twitter applications to display the location where a user posts an update.

Last month, Twitter announced that it was launching the beginnings of a related service, Geotagging API, for several applications. The new acquisition will join the team that leads this effort.

The transaction could inspire other social networking and technology companies to pursue companies that provide local content services. Mixer Labs competes against several startups that provide similar services, including Foursquare, SimpleGeo, GeoAPI, Hot Potato.

Rajiv Dutta, a managing director at Elevation Partners, said, “On the road to eventual broad-based success there are likely to be many experiments. Before joining the San Francisco venture capital firm, Dutta served as president of Skype, In addition, he served as president of PayPal and executive vice president of eBay. “Twitter is trying to add local context and content. Whether it is a path to monetization or not, and I think that remains to be seen.”

Other industry professionals were more enthusiastic about the transaction. Michael Lacovara, Microsoft’s attorney during its antitrust trial, and former CEO of Rodman & Renshaw, said the transaction could make Twitter more commercially relevant. “The beauty of Twitter is that it is a bunch of disembodied voices posting their observations in a vacuum,” he said. “If they can start to anchor content to places and context, it can be a more relevant tool.”

The transaction is similar to last week’s reports that Google was in talks to acquire Yelp, a local business review company. The transaction dialogue led to a public battle between the two companies following the initial leak to the technology blog TechCrunch.

In speaking with Mergers & Acquisitions last week, industry sources discussed other potential buyers for Yelp. Ken Yager, a principal at MorrisAnderson, said Microsoft may consider making a bid for the local content company. Another industry source, speaking anonymously told Mergers & Acquisitions that Facebook may also be readying to make its own competitive bid for Yelp.

Similarly, Dutta said “all the usual suspects” may be interested in Mixer Labs’ remaining competitors. “There is not a company that has a online presence that is not looking to enhance their online content,” he said.

Twitter and Mixer Labs were unable to be reached by press time.

Technology