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Priceline buys travel website competitor Kayak.com for $1.8 billion

Priceline William Shatner

Travel website Priceline has just purchased Kayak.com for about $1.8 billion, or $40 per share, according to press releases from both companies. KYAK closed at $31.04 per share today on NASDAQ. The news broke alongside Kayak's Q3 earnings, which reported that the company pulled in $78.6 million in revenue for the quarter, a 29 percent increase year-over-year. The boards of both companies have already approved the deal, which will send $500 million in cash and $1.3 billion in stock options to Kayak. Of course, the acquisition is subject the the usual shareholder and regulatory approval process, and the two sites will run separately until then.

Kayak.com was a relative upstart in the airfare comparison website field when it launched back in 2004 — Priceline, by comparison, was founded back in 1997. The two sites offer different services, and it remains to be seen whether one will prevail over the other. Kayak searches multiple websites to pull in pricing information for flights, rental cars, and hotels in one place, similarly to Priceline. However, Priceline also operates on a Name Your Own Price model, which makes users enter a binding bid for an itinerary, and one must book if a match is found. Priceline CEO Jeffery H. Boyd does say that "We believe we can be helpful with KAYAK's plans to build a global online travel brand," but we'll have to wait and see just what that means for fans of Kayak in Q1 2013, when the deal is expected to close.

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