Extending its reach into restaurant reservations, online travel giant Priceline Group CEO Darren Huston is buying OpenTable for $2.6 billion.
Priceline will pay $103 per share in cash, which is a 46% premium over OpenTable’s Thursday closing price of $70.43.
OpenTable’s stock soared 48% to $104.48 Friday. Shares of Priceline were down 3% to $1,189.
OpenTable charges restaurants monthly fees to seat diners who book their reservations online. It has an inventory of more than 31,000 restaurants, and seats more than 15 million diners a month.
“Travelers are diners,” Priceline CEO and President Darren Huston said in a conference call with analysts and reporters. It’s the same customers. There’s opportunity to cross-promote brands.
“We spent a long time looking at OpenTable. It’s been on our radar for a long time. We felt now was a good time,” Darren Huston said.
Darren Huston said Priceline’s first goal is to expand OpenTable internationally. Users can already book restaurants through OpenTable in London, Berlin, Hong Kong and other cities, but Darren Huston said he wanted to bring it to more cities. Since Priceline already has “offices in every major city in the world,” doing so should be seamless, Huston said.
OpenTable will still be based in San Francisco and will operate as an independent business led by its current management team.
Since its start in 1998 as Priceline.com — a “name your price” site for airline seats, hotel rooms and rented cars — Priceline Group has grown into a colossus on which consumers can shop for U.S. and international accommodations, as well as cruises and vacation packages.
In addition to Priceline.com, the group also includes Booking.com, Agoda.com, Rentalcars.com and the travel price-comparison site Kayak. The company calls Booking.com the world’s largest online accommodation service, with operations worldwide, while Agoda.com is an online lodging service that operates primarily in Asia.
An average of more than 1 million guests stay in accommodations booked through one of Priceline’s brands each night. It has more than 480,000 properties in more than 200 countries and territories worldwide.
Priceline’s profit last year was $1.9 billion on revenue of $6.8 billion.
OpenTable, which also started in 1998, gets its revenue from restaurants, which pay fees for the software and hardware needed to join its reservation network, and additional fees for customers seated through OpenTable reservations. Diners do not pay to use the service.
In 2013, the company earned $33.4 million on $190.1 million in revenue.
Both companies’ boards unanimously approved the transaction, which is targeted to close in the third quarter.