/>
X

Priceline scoops up Kayak for $1.8 billion

Priceline's acquisition of Kayak gives the travel sites more heft to compete with search engines, which are gobbling up data on air travel and other bookings.
larry-dignan-eic.jpg
Written by Larry Dignan, Contributing Editor on

Priceline said that it will acquire Kayak in a deal valued at $1.8 billion, or $40 a share. The move consolidates travel research tools and bookings, but Priceline said it will keep Kayak independently run.

According to a statement, Priceline will pay $500 million in cash and $1.3 billion in stock for Kayak, which closed just above $31 on Thursday.

Kayak processes more than 100 million queries each month on flights, hotels and rental cards. Priceline will give the site more distribution globally as well as heft.

And Kayak could use a big brother. Kayak relied on ITA's software for travel data. ITA was acquired by Google. In regulatory filings, Kayak outlined the following:

On April 8, 2011, Google, Inc., or Google, entered into a consent decree agreeing to conditions on Google’s acquisition of ITA, and Google subsequently completed its acquisition of ITA. The consent decree stated Google’s intent to offer an online travel search product and Google has since launched hotel and flight search tools and services that directly compete with the tools and services we offer. Google’s flight search offering includes significantly increased speed on return of search results and, in the future, may include other enhancements or improvements in performance of the ITA software which may not be made available to us. Although the consent decree will provide us with the right to renew our existing ITA agreement on the same terms until October 2016, if ITA or Google limit our access to the ITA software or any improvements to the software, separately develop replacement software to which they claim we are not entitled or increase the price we pay for any improvements or replacement software and we are unable to replace ITA’s software with a comparable technology, we may be unable to operate our business effectively and our financial performance may suffer.

With Priceline, Kayak will have more distribution and alternatives should an ITA deal flop. Overall, Kayak's biggest risk factor was search engines. Microsoft acquired Farecast in 2008 and relaunched it as Bing Travel.

Here's a look at Kayak's stock performance since going public. 

kyak110812

Related

Are you ready for the worst Economy Class airline seats in the world?
airline-seats.jpg

Are you ready for the worst Economy Class airline seats in the world?

Business
Microsoft Azure-certified roles are well-paid, and you can study for certification for $39
replace-this-image.jpg

Microsoft Azure-certified roles are well-paid, and you can study for certification for $39

Deals
Remote working vs back to the office: Benefits are clear, but there could be trouble ahead for some
A middle aged man in casual attire sat at his computer desk speaking to colleagues via a split-screen video chat application

Remote working vs back to the office: Benefits are clear, but there could be trouble ahead for some

Professional Development