Share This Page

Priceline to buy travel website Kayak for $1.8B

| Friday, Nov. 9, 2012, 12:01 a.m.

Priceline.com Inc., the most valuable online travel agency, has agreed to buy Kayak Software Corp. for $1.8 billion in cash and stock to expand its web-based travel services.

Kayak shareholders will receive $40 a share, the companies said in a statement. That price represents a 29 percent premium over Kayak's closing price of $31.04 in New York on Thursday, and it includes about $500 million in cash as well as $1.3 billion in equity and assumed stock options.

Priceline has been using acquisitions to add customers as it works to grow sales and fend off competition in a sluggish economy. Kayak, which raised $91 million in an initial public offering in July, lets travelers compare prices and make reservations for hotels, flights, cars and vacations.

“It is obviously a great source of customers for Priceline,” said Andre Sequin, an analyst at RBC Capital Markets. “We weren't really expecting it on our end. Priceline's done very well in this space on their own, and as Kayak does serve competitors as well, it wasn't necessarily a step we were looking for them to do.”

The shares of Norwalk, Conn.-based Priceline slipped as much as 2.5 percent to $612.12 in extended trading after the deal was announced. Kayak surged as much as 32 percent to $41.01 in extended trading.

The boards of each company have unanimously approved the transaction, which is expected to close in the first quarter of 2013. Kayak's management team will continue to run operations as an independent unit within Priceline.

“Kayak has built a strong brand in online travel research, and their track record of profitable growth is demonstrative of their popularity with consumers and value to advertisers,” Priceline CEO Jeffery Boyd said in the statement.

Kayak's competitors in the online travel market include Google Inc. and Microsoft Corp., which have both made acquisitions to expand their businesses, as well as startups like Hipmunk Inc.

The company was founded in 2004 by Chief Executive Officer Daniel Stephen Hafner and Paul English, the chief technology officer. They held a combined 16 percent of the company's voting power.

as of July. The biggest backers at the time of the IPO were General Catalyst Partners, Sequoia Capital, Accel Partners and Oak Investment Partners.

Morgan Stanley and Deutsche Bank AG led Kayak's offering.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.