Is OpenTable worth a 46% premium??
Online travel company, Priceline Group, has stated that it plans to buy restaurant booking service, OpenTable, for $2.6 billion cash. Priceline has offered $103 per share of OpenTable which is a 46% premium at its current price. Here are some quotes from WSJ:
"The kind of work that we do day-to-day is very similar," Priceline Chief Executive Darren Huston said in an interview. "It's just a different marketplace."
aim to use their global reach to expand OpenTable business which relied on the U.S. for 80% of revenues last year. Priceline derives about 80% of its revenues from abroad.Priceline executives
CEO Matthew Roberts, the same strategy it used to fold in Booking.com and Kayak. The latter site still runs out of a Norwalk, Conn., office building two miles away from its parent company.Priceline plans to let OpenTable run nearly autonomously under
Is this a smart move for Priceline to buy OpenTable at such a premium, given that they deal with totally different markets?
At that kind of a P/E ratio, I'm beyond a bit leery.
this touches on the right answer, which is: it doesn't really matter what the premium is.
Damn, at my internship 2 years ago I told my PM he should invest in OpenTable. It was at like $28 at the time, and I made a 20 page research report explaining why. I obviously had no idea what I was talking about, but would've been sweet if he listened to me.
You should reach out to him...rub it in :)
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