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Priceline flies into the restaurant business with $2.6 billion OpenTable deal

Priceline flies into the restaurant business with $2.6 billion OpenTable deal

Laura Lorenzetti

@FortuneMagazine

JUNE 13, 2014, 8:13 AM EDT

Acquisition expands the traditionally travel-only booking site’s services.

Priceline is snapping up restaurant-reservation platform OpenTable for $2.6 billion in cash, expanding the traditionally travel-only booking site’s services.

Priceline  PCLN -1.82%  will pay $103 a share for the company, a 45% premium to OpenTable’s  OPEN 0.96%  $71.13 closing price Thursday, the company announced Friday. The deal should be completed in the third quarter.

“They provide us with a natural extension into restaurant marketing services and a wonderful and highly-valued booking experience,” said Darren Huston, CEO of the Priceline Group. “We look forward to helping the OpenTable team accelerate their global expansion.”

The online travel site has been buying its way to growth over the past decade, acquiring rivals Booking.com andKayak.com. This latest purchase will help the company go beyond cars, hotels and air flights. OpenTable brings with it nearly 15 million people that book reservations across 31,000 restaurants on its platform each month.

There’s “a lot of green space in international” for OpenTable, Huston said on a call with analysts Friday morning. This room for growth is part of the reasoning behind the healthy price premium, he said.

Currently, the restaurant booking operates in six countries, including the U.S. Priceline plans to use its infrastructure to expand OpenTable’s services globally and cross-market it with its existing booking customers.

“It’s critical to understand its the same customers, travelers are diners,” said Huston. “This is another leg of the stool for the Priceline Group.”

OpenTable, which is the leading global dining reservation platform, will continue to be headquartered in San Francisco, Calif., and will operate as an independent business with its current management team under the Priceline Group umbrella of companies.

Shares of other online platforms gained sharply in pre-market trading on the news, including Groupon  GRPN -1.07% , Yelp  YELP 0.11%  and Grubhub  GRUB -5.16% .

 

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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