Priceline will pay $40 per share in cash and stock for Kayak, valuing the travel research site at $1.8 billion. Approximately $500 million will be paid in cash and $1.3 billion in equity and assumed stock options.
Board of directors from both Priceline and Kayak expect the deal to close late on in the first quarter of 2013. Priceline envisages the impact of the acquisition on Kayak’s earnings in 2013 to be minimal.
Priceline Group President and Chief Executive Officer, Jeffery H. Boyd, affirmed his belief that Kayak was a suitable match. He pointed to the value in Kayak’s technology and innovation when Priceline was making the acquisition.
“KAYAK also has world class technology and a tradition of innovation in building great user interfaces across multiple platforms and devices,” he said. “We believe we can be helpful with KAYAK's plans to build a global online travel brand.”
Surge in Kayak share price
Shares at Kayak took a steep incline during after-hours trading once the purchase announcement hit the newswire, touching an all-time high of $39. The online travel firm’s only been a public offering for about four months, but its latest financial statement points to a healthy business.
The first nine months of 2012 yielded a net income of $19.4 million for Kayak. Revenues for the same period amounted to $228.9 million, which is a year-on-year increase of 34.2%. Analysts are predicting annual revenue of over $300 million and net income of $25 to $30 million.
Priceline, a 15-year veteran of the travel industry, finished the first nine months of its fiscal 2012 with $4.1 billion in revenue and $1.11 billion in net income. Unsurprisingly, the company’s expected to dwarf Kayak’s full-year revenues with a figure close to $5.3 billion.
Steve Hafner, KAYAK Chief Executive Officer and Cofounder, was enthusiastic about the potential of working with Priceline. “We're excited to join the world's premier online travel company,” he explained. “The Priceline Group's global reach and expertise will accelerate our growth and help us further develop as a company.”