Priceline’s pending $1.8 billion acquisition of Kayak may have come as a shock to most of the travel industry, but Priceline and Kayak conducted high-level discussions about it “from time to time over the past few years.”
Details about how the deal went down emerged today in a Priceline financial disclosure.
In a lengthy section of the document entitled “Background of the Merger,” Priceline outlines how none of those prior discussions over the years led to a detailed acquisition proposal, and each time the Kayak’s board decided to continue on its path toward an IPO.
Priceline also lays out a blow-by-blow account of how the ultimately successful round of talks, which began in earnest on March 8, 2012, progressed and culminated with execution of the agreement after a Kayak board meeting on November 8, 2012.
In addition to the back-and-forth about an acceptable acquisition price, one interesting aspect of the chronology is that in mid-September Kayak CEO Stephen Hafner approached the head of corporate development at “Company X” to see if it would be interested in a business combination with Kayak, according to Priceline. Priceline states:
The president and chief executive officer of Company X indicated that there was no interest on the part of Company X in discussing a potential business combination with KAYAK.
Kayak executed its IPO on July 20, 2012.
But, why did Kayak proceed with it when its latest round of discussions with Priceline began on March 8, and were followed by three “conceptual discussions” between Priceline CEO Jeffery Boyd and Hafner in June and early July? Priceline states:
Mr. Boyd informed Mr. Hafner that priceline.com would not be able to negotiate a potential business combination before KAYAK’s anticipated closing of its initial public offering due to the level of analysis and the time required. Accordingly, Mr. Boyd informed Mr. Hafner that priceline.com may be in touch regarding a potential business combination at a future date. As a result of these conversations, the parties agreed not to proceed with discussions about a transaction.
The talks resumed in late August when Priceline offered Kayak $35 per share, and Kayak insisted eventually that the acquisition price would have to be at least $40 per share.
In other morsels in Priceline’s Securities and Exchange Commission filing, the online travel agency discloses that under certain circumstances Kayak could terminate the agreement if it receives a superior offer and pays Priceline a $52.7 million termination fee. Kayak, however, is barred from soliciting new acquisition offers.
Full documents embedded below: