Under the terms, Priceline will pay $500 million in cash and $1.3 billion in equity and assumed stock options. The transaction is subject to customary closing conditions, and is expected to close by late 1st quarter 2013.
Subject to various conditions, KAYAK shareholders will have the right to elect to receive cash or stock with a value of $40 per KAYAK share. The transaction summary also specifies:
The stock portion of the consideration will be subject to a 10% collar pursuant to which the value of the Priceline.com stock delivered to those receiving stock will be $40 per KAYAK share so long as the aggregate volume-weighted average Priceline.com trading price for the 30-day period ending 2 days prior to Closing (as set forth more fully in the Merger Agreement) is between $571.31 and $698.27 per Priceline.com share. If such average price is above $698.27 or below $571.31, those receiving Priceline.com stock will receive a fixed exchange ratio as set forth in the Merger Agreement. The final number of Priceline.com shares to be issued on a fully diluted basis will range between approximately 1.9 million and 2.3 million shares and options at closing.
As part of the deal, Kayak’s current management team will continue operations independently, but as part of the Priceline Group of companies. The brand will be kept as well:
“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,” said Priceline Group President and Chief Executive Officer Jeffery H. Boyd. “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.”
Priceline’s interest in Kayak is not new, and the acquisition can only strengthen the company’s position on a very competitive market. Kayak is a popular choice for travelers looking for flights, hotels and rentals cars. According to official sources, Kayak processes over 100 million user queries each month through its global websites and mobile applications.