The Canadian Press - ONLINE EDITION

Priceline to pay $2.6 billion tab to buy online restaurant reservation company OpenTable

  • Print
FILE - In this Thursday, Nov. 2, 2000, file photo, Priceline.com headquarters is shown, in Norwalk, Conn. Priceline is buying online restaurant reservation company OpenTable for $2.6 billion. The deal should help Priceline, the online travel company, branch out into a new business segment. (AP Photo/Douglas Healey, File)

Enlarge Image

FILE - In this Thursday, Nov. 2, 2000, file photo, Priceline.com headquarters is shown, in Norwalk, Conn. Priceline is buying online restaurant reservation company OpenTable for $2.6 billion. The deal should help Priceline, the online travel company, branch out into a new business segment. (AP Photo/Douglas Healey, File)

NEW YORK, N.Y. - 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 per cent premium to OpenTable Inc.'s Thursday closing price of $70.43.

Shares of OpenTable soared 33.05, or nearly 47 per cent to $103.46 in midday trading Friday. Priceline shares fell $22.16, or 1.8 per cent, 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 per cent 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.

OpenTable also is working on making it easier to sign up new restaurants to its service, said Huston. The company is creating a cloud-based system instead of using the hardware it now needs restaurants to install to use OpenTable.

At Priceline, an average of more than 1 million guests stay in accommodations booked through one of brands each night. It has relationships with more than 480,000 properties in more than 200 countries and territories worldwide.

Brian Sozzi, of Belus Capital Advisors noted that competition for OpenTable has increased from services including Grubhub.com and Ureserv.com, but OpenTable still dominates in a fragmented market.

"This will be a one-stop solution to the customers," he said. He noted that Priceline is becoming like an Amazon.com to travellers.

In an interview with the Associated Press, Huston said that the next big wave is tackling ways to use mobile technology to enhance the dining experience.

OpenTable is testing a service where the diners' phone is connected to the restaurant's payment system, he said. That means that as diners order they can see the bill increase as they order more and can pay without ever having to interact with the waiter. He said Priceline will help to expand that test around the country.

The Norwalk, Connecticut, company changed its name from Priceline.com Inc. to Priceline Group Inc. in April to better reflect the breadth of its business. Its brands also include Booking.com, priceline.com, agoda.com, and rentalcars.com.

Both companies' boards unanimously approved the transaction, which is targeted to close in the third quarter.

___

AP Business Writer Michelle Chapman contributed to this report in New York.

___

Follow Anne D'Innocenzio at http://www.Twitter.com/adinnocenzio

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Jaws of life used to free two people after two-car collision

View more like this

Photo Store Gallery

  • Marc Gallant / Winnipeg Free Press. Local- Weather standup. Sundog. Refraction of light through ice crystals which caused both the sun dog and and fog along McPhillips Road early Wednesday morning. 071205.
  • A female Mallard duck leads a group of duckings on a morning swim through the reflections in the Assiniboine River at The Forks Monday.     (WAYNE GLOWACKI/WINNIPEG FREE PRESS) Winnipeg Free Press  June 18 2012

View More Gallery Photos

Poll

What should the city do with the 102-year-old Arlington Street bridge?

View Results

View Related Story

Ads by Google