With consolidation and other metasearch rivals getting stronger, the Priceline Group signed a deal to acquire UK and Denmark-based metasearch site Momondo Group for $550 million in cash.
Skift reported exclusively last month that Priceline’s Kayak unit was shopping for a metasearch rival in Europe and that talks were under way between Kayak and Momondo. The discussions started in the Fall.
The Priceline Group officially made the acquisition, which is subject to regulatory approvals, but the Momondo Group, with its Momondo and Cheapflights metasearch brands, will be rolled into Kayak. The enlarged Kayak will likely determine country by country which would be the leading brands among the three in specific geographies.
The deal price of $550 million, with the Priceline Group buying all of Momondo Group’s stock, isn’t a huge one compared with Priceline’s acquisition of OpenTable for $2.6 billion in 2014 — but it is the Group’s largest since then.
Kayak co-founder and CEO Steve Hafner tells Skift that the acquisition of the Momondo Group, which is strong in flight metasearch, will help Kayak in markets such as the UK, the Nordics and Russia, where Kayak has faced an uphill battle or hasn’t devoted much marketing money.
Hafner says one of the first orders of business will be to start putting Kayak, Momondo and Cheapflights onto a common backend technology platform. He says there is an affinity among the brands in that the three market themselves in a playful way although there are distinctions, as well. Since the Momondo Group isn’t very strong in hotels, it won’t do much to help Kayak in its competition with newly public company Trivago in the U.S. or Europe.
This deal takes place because of the strength of the Momondo brand and the audience it captured and not because of any particular engineering or technological prowess. U.S.-based Kayak, which has been expanding internationally but only on a profitable basis, is strong in France, Spain and to some extent in Germany through its Swoodoo brand. But Kayak has struggled for years in the UK and doesn’t have much going on in the Nordics; Momondo and Cheapflights will help in the UK, the Nordics and Russia.
Boston-based Great Hill Partners, a private equity firm, took a majority stake in the Momondo Group in 2014 with a $130 million investment that valued the company at $210 million.
Skift predicted last month that a Priceline Group acquisition of Momondo would likely be in the $550 million to $1 billion range — admittedly a huge gap — depending on the multiple. Our calculation was based on Momondo Group’s estimated $102 million in 2016 net revenue, and projected growth for 2017 at 30 to 40 percent.
Among its brand accomplishments, Momondo’s recent “The DNA Journey” campaign [embedded below] attracted 200 million video views and a reach of 400 million when coupled with publicity. In a time of divisiveness regarding political turbulence and refugees, the campaign emphasizes how people who had heir DNA tested and discovered their roots found they have much in common with other ethnicities whom they thought were so different.
Momondo Group CEO Hugo Burge said of The DNA Journey campaign: “We viewed it as game-changer for positioning the Momondo brand, putting a marker in the sand for our company purpose and differentiation. I’m proud of team for creating and executing so well.”
The deal is the first for Glenn Fogel as CEO of the Priceline Group. He has choreographed numerous acquisitions for the Group, including Active Hotels in 2004 and Bookings B.V. in 2005 to create Booking.com. Fogel took on his new role as CEO of the Group in December.
“Metasearch is appealing to consumers and we’re keen to expand our global footprint,” Fogel said in a statement announcing the deal. “Momondo and Cheapflights will be nice additions to our meta portfolio under Kayak.”
Burge of Momondo Group stated: “We couldn’t be more excited to join such an esteemed group of loved brands and join forces with Kayak to bring the best in metasearch to our growing customer bases worldwide.”
The acquisition takes place as rivals have been making their moves. In November, China’s Ctrip acquired flight-metasearch Skyscanner, which is strong in Europe and increasingly in Asia; Expedia’s Trivago hotel metasearch site executed an initial public offering in December; Google is making steady inroads in its flights and hotels metasearch features; and Airbnb has floated its ambition to start selling flights.
The Momondo Group has two brands, Momondo and Cheapflights. Cheapflights, which transitioned from deal-publishing to metasearch price comparisons a couple of years ago, has a presence in 20 markets and Momondo touches 35 international markets. But the prime benefits of Kayak potentially acquiring Momondo is that Cheapflights would help Kayak in Skyscanner’s home UK market and Momondo is the metasearch leader in the Nordics.
By adding Momondo Group, Kayak would get additional scale in Europe and a good brand in the form of Momondo, an important factor when considering that Google’s preferencing of its own flights and hotel products in search makes organic search, or search engine optimization, all the more challenging. Momondo is a strong lifestyle brand, and the Momondo Group stated earlier this year that around 40 percent of its traffic is direct.
The deal also is a pre-emptive move in avoiding seeing a rival acquire the Momondo Grouo instead.
Here is the Momondo Group’s DNA Journey: