DealBook: Priceline.com to Buy Kayak for $1.8 Billion

Written By wartini cantika on Jumat, 09 November 2012 | 17.35

Just months after going public, Kayak Software has been snapped up by a rival.

On Thursday, Priceline.com, a travel company from an earlier Internet age, agreed to buy Kayak, a younger competitor, for $1.8 billion in cash and stock.

The acquisition, the largest in Priceline's history, could provide a new source of revenue for the company.

Priceline, once a highflying company that survived the dot-com bubble in the late 1990s, acts as an online travel agent. It collects fees and commissions on reservations. Kayak, which was started in 2004, allows users to search other sites to compare prices. It makes most of its money from referrals and advertising.

"I see Kayak serving as a global entree into the advertising market for Priceline," said Daniel Kurnos, an analyst at the Benchmark Company. He said the deal could help Priceline "with their search rankings and give them some additional expertise in the technology department."

The companies' global ambitions are also symbiotic. Priceline, which also owns the Asian travel site Agoda.com, has been pushing into new markets overseas. International reservations accounted for 78 percent of its total last year.

In the third quarter, Kayak's revenue from outside the United States amounted to $17.3 million, a 40 percent increase from the period a year earlier, the company said when it reported earnings on Thursday. Overall third-quarter revenue rose 29 percent, to $78.6 million.

"We believe we can be helpful with Kayak's plans to build a global online travel brand," Priceline's chief executive, Jeffery H. Boyd, said in a statement.

The deal is yet another corporate evolution for Kayak. In a matter of months, the travel search site has gone from a privately held start-up to a publicly traded company to a unit operating under the umbrella of Priceline.

Following a long path to the public markets that started in 2010, Kayak got a relatively warm reception from investors in its July debut. Just months after the troubled offering of Facebook, shares of Kayak surged on their first day of trading, closing at roughly $33. Since then, the stock has fluctuated.

Priceline will pay roughly $40 a share for Kayak. At that level, the acquisition represents a 29 percent premium over Kayak's closing price of $31.04 a share on Thursday. The transaction is expected to close in the first quarter of next year.

"We're excited to join the world's premier online travel company," Steve Hafner, Kayak's chief executive, said in a statement.


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