Priceline to Buy Kayak for $1.8 Billion and Keep Kayak Brand

A bomb just dropped in the online travel world: Priceline the world's largest travel company, has agreed to acquire travel meta-search company Kayak, for about $1.8 billion. Priceline's shares are down about 1.7 percent in extended trading, while Kayak's up about 1.6 percent.

Major Deal Points: Priceline is offering $40 per share of Kayak, which is about 30 percent premium on today’s share value of around $30 a share. This values the company at about $1.8 billion, with about $500 million in cash and $1.3 billion in equity and assumed stock options.Both boards have approved the deal, but shareholder approval required, expected to close by Q1, 2013.Kayak to remain a separate brand, with same management.As of November 8, 2012, Kayak’s directors and officers owned 70.4%, of its Class A and Class B common stock, which represents 77.9% voting power, which means shareholder resistance to the deal unlikely.In a separate SEC filing, Kayak mentioned that it has extended its Google deal till Oct 2014. This is not for Google’s ITA airline search software, but for the marketing services deal, though it is material enough to Kayak’s earnings.Kayak’s stint as a public company wil be short, assuming this deal comes through. It went public on July 20 this year, and just announced its first ever earnings as a public company. Rafat's First Take

I think this a great deal, and Priceline is probably among the best acquirers in Internet history, I would even say as good as Cisco of yore. Booking.com turned out to be among the best acquisitions ever, so did its buyout of Agoda.com, and now Kayak, which they will keep separate, could be in a similar vein.

Kayak has gone through many deathwatches before: first was when Google bought ITA software and everyone thought that'd be the end of Kayak's metasearch life as Google would throttle it. Nothing like that happened, as Google's own travel metasearch efforts have been minuscule and ITA Software is stil being licensed to competitors including Kayak, Bing and others. Then it was with its IPO, which almost never took off, but then did and since its IPO debut on July 20th, the sto