Priceline Announces Opentable Acquisition for $2.6 Billion Cash
NEW YORK (TheStreet) -- Priceline
For Priceline, Opentable provides "a natural extension into restaurant marketing services and a wonderful and highly valued booking experience for our global customers," said Darren Huston, the president and CEO of Priceline, in a press statement.
Priceline helps find the best prices when booking planes, hotels, cruises, cars, and vacation packages. Priceline acquired Kayak, another travel booking website, in 2012. San Francisco-based Opentable company allows users to make restaurant reservations online.
Capital Group Companies owns 13.98% of Opentable shares, T. Rowe Price owns 9.11%, while investment firm BlackRock
Reaction to news of the acquisition has been positive.
"We think Opentable has somewhat under-invested in traffic acquisition and conversions, and can clearly benefit from Priceline's expertise, particularly in search marketing efforts overseas," wrote RBC Capital Markets in a report led by Rohit Kulkarni. "Opentable is predominantly used by locals but with help from Priceline, Opentable could tap into the non-local market as part of the end-to-end app."
Nonetheless, Opentable could run into expansion problems abroad because of previously established competition. Domestically "Opentable has a "monopolistic" market share, particularly in N.America, but we have come across a series of private / local players in Europe (e.g. La Fourcette- acquired by Tripadvisor and Bookatable/Live Bookings) and Japan (Tabelog - operated by Kakaku.com)," wrote Kulkarni.
The deal is expected to close in the third quarter of 2014.
Shares of Opentable were surging 47% to $103.73 while Priceline was falling 2.5% to $1,195.84.
**Why Priceline's $2.6 Billion Buy of OpenTable May Be a Bargain