Priceline Books Mobile Growth in OpenTable Deal

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June 13 (Bloomberg) -- Bloomberg’s Julie Hyman and Paul Sweeney break down Priceline’s $2.6 billion deal to purchase internet restaurant reservation service Opentable, what the combination brings to both companies and the growing consumer demand for mobile services. They speak on Bloomberg Television’s “Market Makers.”

The ceo of priceline said, we think it is a good fit.

They called it an adjacent business.

We have similar business models.

You are catering to the same sort of customers.

There is definitely true to that.

These are the same people spending their money in different channels.

One thing i was intriguing that they mentioned was the possibility of eventually -- just like with priceline, you are paying online for your plane ticket.

Could there be a point where you wouldn't have to pay your waiter?

You would pay with a nap instead.

They did allude to that coming down the line.

That was a side note in the call, but an intriguing one.

There are potentially some growth opportunities here.

They also talked about the idea that there are 30,000 restaurants that participate in this, there are far more restaurants out there.

At least, theoretically.

Casual dining restaurants use these.

His idea is that maybe you could have more expansion into more casual places.

As oppose to just the high-end restaurants.

Why is there this surge?

We have the new at red sea -- atrezzie at.

Yelled is going -- yelp is going in the directions too.

You are still going to go to opentable separately, and priceline operates a number of different sites under its company under separate banners.

Kayak is still separate, is still separate.

Opentable will still operate out of san francisco.

Priceline says we will still have the same management team.

Yes, it is aggregation under one business but under different brands.

Were you surprised it was priceline the bottom?

-- priceline that bought them?

I thought it would be yelp.

There is too much overlap.

Yelp is trying to develop their own system.

I thought maybe opentable and grubhub would have merged.

Whether it is a table at the restaurant or take-out, it's the same thing.

At this case you were talking about the same platform, different -- i want to put this question to paul sweeney and covers media technology, what do you think?

Would have made more sense for opentable to combine with grubhub or is a company like priceline the logical acquirer?

It makes a lot of sense, priceline can afford it.

They are trying to open up a new vertical with the restaurants, in addition to hotels and airlines and car rentals.

They are going to open up this restaurant vertical.

Opentable is the best place to make.

Priceline is looking to increase their mobile usage.

Whether it is facebook or google, everyone is trying to think about how to participate in the growth of mobile usage.

If you are priceline, opentable which is primarily mobile base, this is a great way to do it.

You are saying this is a good move, priceline is the right company?

I think so.

They looked at -- opentable is primarily domestic.

One of the things priceline could do is bring that to an international marketplace.

I think within the priceline portfolio of properties, opentable is certainly one that fits in pretty well.

They certainly paid up for it, 10 times revenue with a 40% premium.

It's not cheap, but nothing is.

I'm still trying to get my head around facebook paying 19 million -- $19 million for whats app.

I'm surprised they didn't pay for this partially in stock.

Their stock is up 50% over the past year, it is been doing very well.

Does that say something too potentially not a bubble here?

As we have seen in a lot of these tech deals, they have been using stock.

I think what happened was this was a little more of who the sellers were at opentable.

I think some of the private equity investors that opentable preferred cash.

Usually we see some kind of stock component.

From that perspective, it was unusual.

A little unusual.

What might this do for the other companies?

If priceline owns opentable, is that kind of like facebook owning oculus?

If you want to get into virtual reality, forget about it because you have facebook behind it.

To these other would-be competitors have a shot?

I think they do.

There are two exits for a lot of these startup companies him of the ipo market which remains robust.

The strategic m&a market remains very robust here.

You are seeing a lot of strategic deals getting done.

I think it is a great time to raise capital, we all know that.

It also shows that there are lots of exits for the start up companies for investors.

The ecosystem within technology in silicon valley seems to be alive and well.

Alive and well, not frothy?

$19 billion for whatsapp, that extraordinary.

You keep hearing relative to bubble -- the .com bubble in the 90's -- they have real revenue growth as opposed everything being on the count.

Who else might have gone after opentable?

It is rare that there is a perfect combination, only one company that would buy.

Who else might have been sniffing around?

That might ask the 46% premium?

Anyone who is looking to get into the local marketplace.

Someone who is trying to increase their mobile percentage.

The percentage of business coming out of their mobile apps.

It could have been anybody of the big companies looking for a strategic by.

-- a strategic buy.

Essentially expedia on the travel site.

I think it kind of illustrates that there are a lot of strategic buyers out there that are recognizing that business is going mobile.

If there is a proven business model like opentable i'm a and it has a strong mobile base, that is attractive.

Paul, thank you very much.

This text has been automatically generated. It may not be 100% accurate.


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