POSTED: 1:30 a.m. HST, Jun 14, 2014
Not content with a commanding presence in online travel booking, Priceline is now taking aim at the world of dinner reservations.
The company agreed Friday to buy OpenTable, the giant of the restaurant bookings business, for $2.6 billion in cash. With the deal, it is hoping that consolidating the businesses of reserving seats for planes and for restaurants will be a smooth and profitable combination.
It is the biggest deal yet by Priceline, which has turned to acquisitions to bolster its stable of online brands. Last year the company completed its $1.8 billion takeover of Kayak, the travel comparison site.
The deal was not driven by a slowdown in Priceline's core businesses, according to the company's chief executive, Darren R. Huston. The company has reported seven straight years of rising profit, earning $1.9 billion last year.
But it had long weighed a potential partnership or acquisition of OpenTable, having met its management team at numerous conferences over the years.
The two companies aren't quite the same. Priceline serves as an online travel agency, collecting commissions on user reservations through its namesake travel brand as well as Kayak and Booking.com. Over its 16 years OpenTable has spent time and money integrating its software into restaurants' systems, essentially managing their inventory of seats and letting them keep track of repeat customers.
That business has grown to encompass more than 15 million diners each month at 31,000 restaurants.
But to Huston, both companies at their core focus on managing local supply. And both of them have been working on improving their mobile offerings, with OpenTable's new mobile-payment system looking especially promising. For its part, Priceline could help lift OpenTable's presence outside the United States.
Priceline is paying $103 a share through a tender offer for the restaurant booking site, a 46 percent premium to Thursday's closing price.
Michael J. de la Merced, New York Times