By Drew FitzGerald
Priceline Group Inc. agreed to buy restaurant booking service
OpenTable Inc. for about $2.6 billion in cash, broadening the
online travel giant's offerings into a new field as some of its
more established brands mature.
Priceline offered $103 a share in cash for the company, a 46%
premium over its closing price Thursday. The deal is expected to
close in the third quarter. OpenTable charges restaurants fees to
book diners on top of monthly fees to use its software.
"The kind of work that we do day-to-day is very similar,"
Priceline Chief Executive Darren Huston said in an interview. "It's
just a different marketplace."
As with hotel booking services, OpenTable's main strength lies
in its inventory of more than 31,000 establishments. The service
"still has plenty of room to expand," Mr. Huston said, particularly
outside the U.S. and on mobile devices.
Priceline, which has grown by leaps and bounds over the last
decade through takeovers of travel websites like Booking.com and
Kayak.com, is looking for new ways to keep profits growing. The
merger extends Priceline's customer base to include the 15 million
people who book restaurants through OpenTable each month.
Priceline executives aim to use their global reach to expand
OpenTable business which relied on the U.S. for 80% of revenues
last year. Priceline derives about 80% of its revenues from
abroad.
Shares of business review site Yelp Inc. jumped 14% to $75.14
early Friday on the news of Priceline's move. Food-delivery service
GrubHub Inc. rose 8% to $36.35, while Groupon Inc. climbed 5.4% to
$6.33. OpenTable shares traded just above their offer price,
suggesting investors had few worries about the transaction's
chances. Priceline's shares, meanwhile, slipped 1.6% to
$1,206.47.
The deal comes about a month after travel review service
TripAdvisor Inc. bought Lafourchette, a Paris-based reservation
service with more than 12,000 restaurants.
Mr. Huston, who joined Priceline in 2011 and took over as CEO in
January, said the company has had an eye on OpenTable for some
time. Recently Priceline has been venturing into new areas,
investing in software that makes it easier for small rentals to
offer rooms through its Booking.com service.
OpenTable, founded in 1998, enjoyed dramatic growth following
its 2009 initial public offering. Its stock faltered two years
later as it struggled to keep adding new restaurants. The San
Francisco company generated $190 million of revenue last year, an
18% increase from the year before, but a small fraction of
Priceline's $6.8 billion in revenue.
Priceline used an even smaller 2005 acquisition of
Amsterdam-based Booking.com to turn a $25 million a year business
into a global behemoth. The company doesn't break out its
individual sites results but said in a regulatory filing that the
Dutch website generated most of its business.
Priceline plans to let OpenTable run nearly autonomously under
CEO Matthew Roberts, the same strategy it used to fold in
Booking.com and Kayak. The latter site still runs out of a Norwalk,
Conn., office building two miles away from its parent company.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
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