Online hotel-booking giant Priceline.com plans to acquire Kayak, another Internet-based travel company, for $1.8 billion in cash and stock, the companies announced Thursday.
Priceline will pay about $500 million in cash and $1.3 billion in stock and stock options for Kayak. The deal has been approved by both companies' boards of directors but still needs approval by regulators and Kayak shareholders. It should close late in the first quarter of 2013.
Priceline says it offers online bookings at more than 270,000 hotels around the world. In addition to the Priceline.com site, it operates the Booking.com, Agoda.com and Rentalcars.com brands within its Priceline Group of companies. Kayak is a travel research site that consolidates information about flights, hotels and rental cars for comparison shopping. It links to multiple other sites, including Priceline's services, where users can complete a booking.
Kayak processes more than 100 million queries per month, according to a press release. Priceline said the acquisition would help Kayak to build a global brand. The Priceline Group operates in more than 180 countries, Priceline said. Priceline will pay $40 per share for Kayak, a significant premium on the company's closing stock price of $31.04 on Thursday. Kayak went public in July. However, Kayak's stock on the Nasdaq (KYAK) was down $0.50 in after-hours trading late Thursday. Priceline (PCLN) was down $6.74 at $627.87.
Kayak's management team will remain in place and run the company independently within the Priceline Group, the companies said. Both companies are based in Norwalk, Conn.