(Corrects Yelp ticker symbol in paragraph 9)
* Looks to expand services in restaurant bookings
* Priceline's offer of $103/shr a 46 pct premium
* OpenTable shares inch past offer price
* Deal expected to close in Q3
By Rohit T. K. and Sagarika Jaisinghani
June 13 Travel website owner Priceline Group Inc
will buy restaurant reservation website operator
OpenTable Inc for $2.6 billion, aiming to broaden its
services outside the increasingly competitive online travel
Priceline's offer of $103 per share for the owner of
OpenTable.com represents a premium of 46 percent to OpenTable's
OpenTable's shares inched past the offer price to trade as
high as $104.19 on the Nasdaq, suggesting that some investors
expect a higher bid.
Priceline's shares were down 1.6 percent at $1,205.50.
Priceline, whose competitors include Expedia Inc
and Orbitz Worldwide Inc, has a record of buying smaller
companies and transforming them into large, successful
With little room to expand, online travel companies are
looking outside the industry to boost revenue and drive more
customers to their websites by offering more of a one-stop shop
for travelers by offering services at their destination.
TripAdvisor Inc, for example, bought French online
restaurant booking platform Lafourchette last month to enter the
Friday's deal gives the travel site operator access to
OpenTable's agreements with over 23,000 U.S. restaurants.
OpenTable has been trying to expand its international
business as it faces increased competition from Yelp Inc
and a slew of startups focused on local services.
"Priceline could further strengthen OpenTable's business,
especially in Europe, where Priceline is the market leader, as a
result of its significant online user traffic and its
organizational infrastructure," Citi Investment Research analyst
Mark May wrote in a research note.
Priceline bought Kayak.com last year and has built it into
one of the biggest travel websites outside the United States. It
has also ramped up U.S. advertising for Booking.com, which it
bought in 2005, giving stiff competition to Expedia.
As of Thursday, OpenTable's shares were trading at about
33.5 times 12-month estimated forward earnings, far below the
498.7 times of Yelp, its closest competitor, according to
Thomson Reuters StarMine.
"I think (the takeover) creates urgency for larger players
to acquire the leading local platforms," Telsey Advisory Group
analyst James Cakmak told Reuters, mentioning Yahoo Inc
, Google Inc and Microsoft Corp as
potential buyers in the sector.
OpenTable posted its first quarterly loss in five years for
the period ended March 31 as it spent more on marketing to stem
the slowdown in the number of restaurants signing up for its
The number of North American restaurants using OpenTable's
platform rose 19 percent, but growth was slower than in the
previous two quarters.
OpenTable, which gets $1.00 from a restaurant if a diner
reserves a table through its website or app, will continue to
operate as an independent business led by its current
management, Priceline said.
Yelp's shares were up 13 percent at $74.65 in midday
trading, having fallen 5 percent this year to Thursday's close.
Priceline reported a 36 percent rise in second-quarter
profit as hotel and car booking rose.
The deal is expected to close in the third quarter.
(Additional reporting by Lehar Mann; Editing by Maju Samuel and