Priceline in an acquisitive mood: what company is next after OpenTable?
HomeAway's business appears to be a better fit for Priceline's business, making it a better target.
When Priceline (NASDAQ: PCLN) completed its acquisition of OpenTable in what was the company's largest buyout deal worth $2.6 billion all-cash, CEO Darren Huston was quick to point out to investors that the company was not planning to become a serial acquirer.
Since the large deal, Priceline has kept true to its word and has not gone shopping again. Few people would think of Priceline as a serial acquirer, at least not in the league of companies likeOracle (NYSE: ORCL) which has spent a cool $50 billion to acquire more than 100 companies over the last 10 years, though of course Oracle operates in a very different industry.
Priceline has now broken the silence and announced it's in the mood for yet another buyout. Very often, investors punish the shares of a company that announces it's planning to make a major acquisition, mainly on concerns of profligacy by paying too much for an acquisition (a rhetoric that was repeated after Priceline acquired OpenTable for a huge 46% premium) or the negative effects on cash flow. Priceline's shares fell by as much as 6% at one point after the OpenTable buyout. So, is Priceline making the right moves, and which companies are in Priceline's crosshairs this time round?