The transaction values KAYAK at $1.8 billion, or $1.65 billion net of cash acquired. This comes to about $40.00 per share based upon a price collar. Priceline will use some $500 million in cash and the other $1.3 billion will be in equity and assumed stock options. Today’s merger announcement has already been approved by both boards of directors, but the deal is subject to approvals and is expected to close by late 1st quarter 2013.
Seeing a merger from a company which has only been public a short time is not the norm. Usually, it is the newly public companies which make acquisitions. Here is a summary:
KAYAK shareholders will have the right to elect to receive cash or stock with a value of $40 per KAYAK share, (subject to (i) the collar mechanism described below and (ii) pro ration such that the overall consideration in the deal to KAYAK shareholders will consist of one-third cash and two-thirds stock). The stock portion of the consideration will be subject to a 10% collar pursuant to which the value of the Priceline.com stock delivered to those receiving stock will be $40 per KAYAK share so long as the aggregate volume-weighted average Priceline.com trading price for the 30-day period ending 2 days prior to Closing (as set forth more fully in the Merger Agreement) is between $571.31 and $698.27 per Priceline.com share. If such average price is above $698.27 or below $571.31, those receiving Priceline.com stock will receive a fixed exchange ratio as set forth in the Merger Agreement. The final number of Priceline.com shares to be issued on a fully diluted basis will range between approximately 1.9 million and 2.3 million shares and options at closing.
Kayak closed down 1.6% at $31.04 today and the post-IPO range has been $26.02 to $37.00. Its IPO price was $26, above its expected range, back at the end of July. Every single shareholder who bought shares and held on is now going to have a handsome profit from their investment in Kayak.
JON C. OGG