Follow The Money: Why Priceline Bought Kayak

Last week, Priceline.com acquired Kayak for $1.8 billion. That's more than twice what Google paid for ITA back in 2010. Why did Priceline make this move? And why now? Priceline acquired Kayak for $40 a share, about $500 million in cash, $1 billion in Priceline equity, and about $300 million in stock options. Kayak got a premium price -- a 29 percent premium, to be exact -- from Priceline considering that, on the day of its acquisition, Kayak closed at roughly $31 a share. That's about 54 percent higher than where Kayak was on IPO day, at $26 a share. This no doubt added to Priceline's impression that Kayak was on the way up and that it was worth paying the big bucks to save it from having to deal with a strong competitor down the road.

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