The Priceline Group's Familiar Story: Smart Multi-Billion Dollar Acquisitions

Priceline (NASDAQ: PCLN  ) made news Friday with the announcement of its $2.6 billion buyout offer for OpenTable (UNKNOWN: OPEN.DL  ) , the leading online reservation portal for U.S. diners. The offer price came in at a 47% premium to OpenTable's closing share price before the announcement, or a rich 13 times sales.

With lower profitability than Priceline and 2013 revenue that amounts to less than 3% of Priceline's $6.8 billion, OpenTable looks, on paper, to be an expensive target that may not move the needle in the near term. However, investors should pay attention to the bigger picture.

Priceline management has an impressive track record of acquiring complimentary businesses that can scale up rapidly and benefit from Priceline's presence globally. CEO Darren Huston has even gone so far as claiming that Glenn Vogel -- Priceline's Corporate Development lead -- has made some of the Internet's most successful acquisitions such as and Kayak. Given this track record and the company's willingness to pay cash up front for OpenTable, the Priceline team believes in OpenTable's growth prospects.

In the included video, Fool Technology Analysts Max Macaluso and Nathan Hamilton talk about Priceline's rationale in acquiring OpenTable and the upside that remains for the company under the Priceline umbrella, in addition to discussing the sympathetic 14% pop that Yelp (NYSE: YELP  ) shares experienced as well.

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Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

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Nathan Hamilton

A fool since 2014, Nathan is an Editor/Analyst covering the tech sector. He previously worked on the buy-side as an Equity Analyst covering consumer, industrial, biotech and energy sectors.

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Related Tickers

12/31/1969 7:00 PM
OPEN.DL $0.00 Down +0.00 +0.00%
OpenTable CAPS Rating: *
PCLN $1252.01 Up +28.55 +2.33%
Priceline Group CAPS Rating: ****
YELP $23.98 Up +0.60 +2.57%
Yelp CAPS Rating: **