NEW YORK — Priceline Group Inc. has negotiated a $2.6 billion entree into the restaurant business.
The global travel booking king announced Friday it is acquiring OpenTable Inc. in a deal that would put Priceline into a new business — doing for restaurant reservations much what it does for hotel bookings.
The deal should give Priceline a new way to cater to its increasingly mobile-savvy customers, while parlaying Priceline’s global reach to expand OpenTable.
“Travelers are diners,” said Priceline Group CEO and President Darren Huston. “It’s the same customers. There’s opportunity to cross-promote brands.”
OpenTable CEO Matt Roberts cited Priceline’s expertise in online marketing globally on all types of devices. “They have an exceptional track record of customer service in dozens of languages around the world,” Roberts said.
Norwalk, Conn.-based Priceline will pay $103 per share, a 46 percent premium to OpenTable Inc.’s Thursday closing price of $70.43. Shares of OpenTable soared 33.05, nearly 47 percent, to $103.46 in midday trading Friday. Priceline shares fell $22.16, or 1.8 percent, to $1,203.84.
Priceline, with sales of $6.8 billion last year, has made a series of acquisitions over the last decade, most recently last year’s purchase of Kayak.com. The acquisitions focused on travel — until now.
Huston noted this deal doesn’t signal an acquisition binge. In fact, Priceline’s main business is still growing well, he said. But he noted OpenTable offers an opportunity to increase the size of its market.
He told The Associated Press the company has seen OpenTable as an acquisition target for many years, and the time is right.
OpenTable seats more than 15 million diners per month at more than 31,000 restaurants. OpenTable allows users to read reviews, view menus and make free reservations at restaurants through its website and mobile apps, and charges restaurants for the bookings.
OpenTable, founded in 1998, has enjoyed double-digit growth for several years and generated revenue of $190 million last year. That’s up 18 percent from the year before and more than triple its 2008 revenue of $55.8 million. In 2010, it purchased toptable.co.uk, a similar site in the United Kingdom.
OpenTable will remain headquartered in San Francisco and will operate as an independent business led by its current management team.
Huston said Priceline’s first goal is to expand OpenTable internationally. Users can already book restaurants in London, Berlin, Hong Kong and other cities, but Huston said it is seeking to add more cities. Because Priceline Group already has “offices in every major city in the world,” doing so should be seamless, he said.
OpenTable also is working on making it easier to sign up new restaurants to its service, said Huston. The company is creating a cloud-based system to supplant the hardware restaurants now need to install to use OpenTable.
At Priceline, more than 1 million guests stay in accommodations booked through one of brands each average night. It has relationships with more than 480,000 properties in more than 200 countries and territories worldwide.
OpenTable is testing a service where the diner’s phone is connected to the restaurant’s payment system, Huston said. That means that as diners order they can track their total bill, and they can pay without ever having to interact with the waiter. He said Priceline will help to expand that test around the country.
Both companies’ boards unanimously approved the transaction, which is targeted to close in the third quarter.