Check, please: Priceline buys OpenTable for $2.6 billion
NEW YORK -- Priceline has negotiated a $2.6 billion entree into the restaurant business.
The global travel booking king announced Friday it is acquiring the OpenTable Inc. in a deal that would put Priceline into a new business doing for restaurant reservations much what it does for hotel bookings.
The deal should give Priceline a new way to cater to its increasingly mobile-savvy customers, while parlaying Priceline’s global reach to expand OpenTable to other countries.
"Travelers are diners," Priceline Group CEO and President Darren Huston said on a conference call. "It’s the same customers. There’s opportunity to cross-promote brands."
In a statement, OpenTable CEO Matt Roberts cited Priceline’s expertise in online marketing globally on all types of devices.
"They have an exceptional track record of customer service in dozens of languages around the world," Roberts said.
Priceline, based in Norwalk, Conn. will pay $103 per share, which is a 46 percent premium to OpenTable Inc.’s Thursday closing price of $70.43.
Shares of OpenTable soared 33.05, or nearly 47 percent to $103.46 in midday trading Friday. Priceline shares fell $22.16, or 1.8 percent, to $1,203.84.
Priceline, which generated sales of $6.8 billion last year, has made a series of acquisitions over the last decade, most recently last year’s purchase of Kayak.com, an online travel site. The acquisitions focused on travel -- until now.
During the conference call Friday, Huston noted the latest deal doesn’t signal it’s going on any acquisition binges. In fact, Priceline’s main business is still growing well, he said. But he noted OpenTable offers an opportunity to increase the size of its market.
In an interview with The Associated Press, Huston said the company has seen OpenTable as an acquisition target for many years. But the time was right now.
OpenTable seats more than 15 million diners per month at more than 31,000 restaurants. OpenTable allows users to make free reservations at restaurants through its website and mobile apps. It makes money by charging restaurants fees for the bookings. Users can also read reviews and view menus through the website or mobile app.
OpenTable, founded in 1998, has enjoyed double-digit growth for the past several years and generated revenue of $190 million last year. That’s up 18 percent from the year before and more than triple its 2008 revenue of $55.8 million. In 2010, it purchased toptable.co.uk, a similar site in the United Kingdom.
OpenTable will remain headquartered in San Francisco and will operate as an independent business led by its current management team.
Huston said Priceline’s first goal is to expand OpenTable internationally. Users can already book restaurants in London, Berlin, Hong Kong and other cities, but Huston said it is seeking to add more cities. Because Priceline already has "offices in every major city in the world," doing so should be seamless, he said.
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