Fly Watch: HomeAway A Potential Takeover Target After Priceline Pact

NEW YORK (TheStreet) -- On June 1, HomeAway  (AWAY) and Priceline Group's (PCLN) KAYAK announced an agreement to display HomeAway vacation rentals on KAYAK's website, with integration expected to be live by the end of the year with nearly 200,000 property listings worldwide. This was the first official partnership between the two companies.

WHAT'S NEW: In a note to investors this morning, Piper Jaffray's Michael Olson and Samuel Kemp said that while their investment thesis on HomeAway is not predicated on an acquisition, they believe the company is an "attractive acquisition target," especially after the agreement earlier this week with KAYAK. The analysts believe an acquirer could pay $45 per share or more in a deal for HomeAway. The firm reiterated its Overweight rating and $39 price target on HomeAway shares.

WHAT'S NOTABLE: In the same analyst note, Piper Jaffray's Olson and Kemp called Priceline the most likely acquirer of HomeAway after this week's distribution agreement, noting Priceline's interest in the vacation rental space and ability to acquire top performers in new verticals. The firm also called out Expedia  (EXPE) and TripAdvisor  (TRIP) as potential acquirers, but discounted Airbnb due to "cultural differences."

PRICE ACTION: HomeAway shares rose 3% to $31 per share in late morning trading. Priceline shares are trading fractionally lower.

Reporting by Eric Buscemi.

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