The Priceline Group Inc . PCLN yesterday announced that it has reached a deal to acquire Momondo Group from Boston-based private equity firm Great Hill Partners.
Over the last one year, the stock has outperformed the Zacks Electronic Commerce industry. It has gained 64.17% compared with the industry's gain of 57.95%.
As a part of the cash deal, Priceline will buy all outstanding shares of Momondo for $550 million. Momondo will be absorbed into Priceline's travel meta brand, KAYAK. The deal, subject to regulatory approval, is expected to be completed by the end of this year.
Momondo Group is Priceline's largest acquisition after OpenTable, which it acquired for $2.6 billion in 2014.
Focus Shifts to Europe
Priceline generates the bulk of its business from international markets where growth prospects are greater than in the domestic market. According to PhoCusWright, online travel booking in Europe is growing at a faster rate than in the U.S.
Since Priceline is very strongly positioned here it will be able to benefit from increasing penetration rates through Momondo. Over the years, Kayak has failed to gain much traction in Europe but the addition of Momondo could help it to consolidate its presence in this market.
The Priceline Group Inc. Revenue (TTM)
An Intensely Competitive Space
The move makes sense in an extremely competitive online travel space. Ctrip CTRP purchased flight-metasearch company Skyscanner in November. Expedia EXPE owned hotel-metasearch site Trivago went for its Initial Public Offering (IPO) in December. Alphabet's GOOGL Google is also flexing its muscles in the space with flights and hotels metasearch features. Notably, metasearch offerings from Google, Skyscanner and Trivago have shown strong momentum in Europe.
Priceline has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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