Advertisements

After OpenTable, what online company could be next in line for a billion dollar buyout?

After OpenTable, what online company could be next in line for a billion dollar buyout?

Laura Lorenzetti

JUNE 13, 2014, 5:03 PM EDT

Yelp, Groupon, Grubhub could be acquisition targets in wake of OpenTable buy.

After Priceline’s  PCLN -2.99%  $2.6 billion deal for restaurant reservation service OpenTable  OPEN 48.35%  hit the wires early Friday, a number of online and local-focused companies saw their shares jump. While traders may be hedging their bets, here are some reasons why three of these companies may be worth the investment.

Groupon

“At that type of premium, we believe the deal is evidence of increasing demand for local marketplaces like OpenTable that connect merchants and consumers,” Christopher Merwin, an analyst with Barclays, wrote in a note Friday about the 46% premium that Priceline paid for OpenTable.

Going local is becoming an increasingly important strategy for retail companies, especially if their business targets the right kind of customers. Groupon  GRPN 3.91% arrived early into the space by selling discounted products and services for merchants, and while the deals site has struggled as consumers soured on the idea, it has some useful technology that could interest a buyer.

The company recently launched a new point-of-sale system called Gnome that integrates payments, customer information and accounting software. If used in the right way, and perhaps without Groupon’s somewhat tarnished brand name, this could become a valuable tool to recruit merchants and provide them data to better reach and track customers.

Yelp

Shares of the business reviews site rose almost 14% Friday – a hefty jump. Like Groupon, its service is teaming with data about merchants and it is locally focused.

Any number of restaurant or retail focused buyers, especially a Priceline-like competitor, could win out by integrating Yelp  YELP 13.79%  and its legions of devoted users. In the past, there have been rumors that the likes of Google  GOOG 0.07%  and Yahoo  YHOO 0.44%  were courting the company.

Google instead struck out on its own integrating customer reviews in its search. Any competitor looking to challenge Google’s hold on search could likely use a full-fledged review site.

Grubhub

This meal-ordering service is basically an OpenTable for your home. The only difference is that your meal is delivered to your doorstep. Grubhub, has its own online and mobile platforms that would be of interest to a larger company.

Priceline CEO Darren Huston said that mobile was a prime consideration in their hunt to buy OpenTable. Any company that is trying to appeal to a new generation of on-the-go customers needs to have a seamless mobile experience. Grubhub,  GRUB 6.98% , whose shares rose sharply on Friday, comes with the tech mojo and 3.85 million unique users that could woo a multi-billion buyout.

 

Advertisements

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.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: