Priceline.com Inc. announced today the acquisition of fellow travel website Kayak. Priceline paid approximately $500 million of the consideration in cash and $1.3 billion in equity and stock options.

This is big news for Bellevue-based travel giant Expedia, who will now have to compete against a stronger and more robust Priceline. In its earnings report released last month, the company’s profits beat expectations and Expedia’s shares soared. But with today’s news, the stock is down more than five percent after hours.

The transaction valued Kayak, which became public this summer, at $1.8 billion or $1.65 billion net of cash acquired and $40 a share. Kayak’s management team will continue to manage the company’s operations independently as a Priceline Group company. The company processes over 100 million user queries each month and was founded in 2004 by former executives of Orbitz, Expedia and Travelocity.

“KAYAK has built a strong brand in online travel research and their track record of profitable growth is demonstrative of their popularity with consumers and value to advertisers,” Priceline Group President and CEO Jeffery H. Boyd said in a press release.  “KAYAK also has world class technology and a tradition of innovation in building great user interfaces across multiple platforms and devices.  We believe we can be helpful with KAYAK’s plans to build a global online travel brand.”

“Paul English and I started KAYAK eight years ago to create the best place to plan and book travel,” added Steve Hafner, KAYAK CEO and co-founder. “We’re excited to join the world’s premier online travel company. The Priceline Group’s global reach and expertise will accelerate our growth and help us further develop as a company.”

Today’s deal is expected to close by late first quarter 2013. Kayak’s stock closed down 1.6 percent at $31.04 today. Priceline closed down 1 percent at $627.87.

Comments

  • http://twitter.com/kforeman1 Kevin Foreman

    Congrats to Steve, GregS, Paul, Bill and the entire team at Kayak.

    Another example of laser focus on customer needs.

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