Travel website owner Priceline Group Inc (PCLN.O) will buy restaurant reservation website operator OpenTable Inc OPEN.O for $2.6 billion, aiming to broaden its services outside the increasingly competitive online travel industry.
Priceline's offer of $103 per share for the owner of OpenTable.com represents a premium of 46 percent to OpenTable's Thursday close.
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 (EXPE.O) and Orbitz Worldwide Inc (OWW.N), has a record of buying smaller companies and transforming them into large, successful businesses.
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 (TRIP.O), for example, bought French online restaurant booking platform Lafourchette last month to enter the restaurant-booking industry.
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 (YELP.N) 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 (YHOO.O), Google Inc (GOOGL.O) and Microsoft Corp (MSFT.O) 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 services.
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.
(Corrects Yelp ticker symbol in paragraph 9)
(Additional reporting by Lehar Mann; Editing by Maju Samuel and Ted Kerr)