Priceline to buy Kayak Software in $1.8bn deal

 
City A.M. Reporter
ONLINE travel agency Priceline.com said yesterday it will buy Kayak Software Corp in a friendly deal that values the company at $1.8bn (£1.13bn).

Priceline is offering $40 a share for Kayak, a 29 per cent premium on the company’s closing price of $31.04 yesterday.

Kayak shares jumped 27 per cent to more than $39 in extended trading, while Priceline.com moved lower.

Daniel Kurnos, an analyst at Benchmark Company, said the purchase would let Priceline.com participate more in the travel advertising space.

“Priceline had previously addressed that it was having issues in terms of marketing efficiencies,” he said.

“This certainly represents an investment for them in the paid-search, or the advertising channel, which is not an area where they've historically had a lot of exposure.”

But Kurnos added the move also exposes Priceline.com more significantly to the volatile air travel market.

Kayak, which uses a website and a mobile site to help consumers compare prices for airlines and hotels, went public in July with shares priced at $26. The deal is expected to close early next year.