Priceline to acquire Kayak in $1.8 billion deal
Kayak allows users to compare hundreds of travel sites when looking for flights, hotels and rental cars. It then sends the consumer to other websites to complete their purchase and earns fees on the referrals, although some bookings can be made directly on Kayak’s website and mobile applications. It also sells advertising.
Kayak was created by the same executives who helped launch other travel sites including Expedia, Travelocity and Orbitz. The company went public in July after delaying its offering more than a year while it waited for the market to strengthen.
The deal needs the approval of Kayak’s shareholders and of regulators. It is expected to close in the first quarter of next year.
“Kayak has built a strong brand in online travel research and their track record of profitable growth” shows the company’s “popularity with consumers and value to advertisers,” said Priceline CEO Jeffery H. Boyd.
Kayak also reported Thursday that third-quarter earnings surged on higher sales.
Net income was $7.2 million, or 19 cents per shares, compared with $4 million, or 18 cents per share, a year earlier. The results matched expectations of analysts surveyed by FactSet.
Revenue rose 29 percent to $78.6 million, while analysts expected $77.4 million.
On Thursday, Kayak shares dropped 50 cents, or 1.6 percent, to end regular trading at $31.04. After news of the $40-per-share deal was announced, they jumped $8.14, or 26.2 percent, to $39.18 in after-hours trading.
Priceline shares closed at $627.87, down $6.74 or 1 percent. In after-hours trading, they dropped another $12.87, or 2.1 percent, to $615.