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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.

 

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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