Online travel site Priceline is adding restaurant bookings to its menu of offerings with the US$2.6 billion all-cash acquisition of OpenTable. The deal has been approved by the boards of both companies and is expected to close in the third quarter.
“OpenTable is a great match for The Priceline Group. They provide us with a natural extension into restaurant marketing services and a wonderful and highly-valued booking experience for our global customers,” Priceline president and CEO Darren Huston said in a statement Friday.
OpenTable books more than 15 million dining seats per month and covers some 31,000 restaurants, Priceline said.
The $2.6 billion price tag represents a 46 percent premium over OpenTable’s closing share price on Thursday.
Priceline has differentiated itself from rivals such as Expedia by giving customers the opportunity to negotiate prices. Shares of Priceline fell 1.24 percent in early trading Friday to $1,210.28.
OpenTable had been on Priceline’s radar for some time, Huston said Friday during a conference call. The price tag is justified as OpenTable will bring an “appropriate level of return” to Priceline over the long term, he added.
“Their business model is very similar to ours,” he said. In addition, Priceline and OpenTable essentially share the same customers, as travelers are also diners, he said. “We believe there’s opportunity to cross-promote to the same customer base.”
Priceline should also be able to help OpenTable expand internationally, Huston said.
The combined company may soon face fresh competition from Reserve, which is backed by Garrett Camp, co-founder of ridesharing service Uber. Reserve’s website is currently bare-bones but teases that “a better dining experience is coming.”