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TheStreet Open House

Priceline Announces Opentable Acquisition for $2.6 Billion Cash

NEW YORK (TheStreet) -- Priceline (PCLN) announced Friday morning that it's going to acquire Opentable  (OPEN) for $103 per share, paying a total of $2.6 billion in cash.

For Priceline, Opentable provides "a natural extension into restaurant marketing services and a wonderful and highly valued booking experience for our global customers," said Darren Huston, the president and CEO of Priceline, in a press statement.

Priceline helps find the best prices when booking planes, hotels, cruises, cars, and vacation packages. Priceline acquired Kayak, another travel booking website, in 2012. San Francisco-based Opentable company allows users to make restaurant reservations online.

Capital Group Companies owns 13.98% of Opentable shares, T. Rowe Price owns 9.11%, while investment firm BlackRock  (BLK) hold an 8.9% stake.

Reaction to news of the acquisition has been positive. 

"We think Opentable has somewhat under-invested in traffic acquisition and conversions, and can clearly benefit from Priceline's expertise, particularly in search marketing efforts overseas," wrote RBC Capital Markets in a report led by Rohit Kulkarni. "Opentable is predominantly used by locals but with help from Priceline, Opentable could tap into the non-local market as part of the end-to-end app."

Nonetheless, Opentable could run into expansion problems abroad because of previously established competition. Domestically "Opentable has a "monopolistic" market share, particularly in N.America, but we have come across a series of private / local players in Europe (e.g. La Fourcette- acquired by Tripadvisor and Bookatable/Live Bookings) and Japan (Tabelog - operated by Kakaku.com)," wrote Kulkarni.

The deal is expected to close in the third quarter of 2014.

Shares of Opentable were surging 47% to $103.73 while Priceline was falling 2.5% to $1,195.84.

**Why Priceline's $2.6 Billion Buy of OpenTable May Be a Bargain --Written by Whalen MacHale in New York

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