Kayak.com surprised the travel tech world
Friday with confirmation that it had acquired SideStep in what is
being reported as a nearly $200 million merger.
Kayak.com CEO Steve
Hafner and Paul English, CTO of the travel search engine, could not
be reached for comment in the wake of the announcement -- which
came after TechCrunch, a technology news Web site, reported a
deal had been reached.
TechCrunch reported
that the news leaked out late Thursday after SideStep CEO Rob
Solomon told employees of the merger agreement.
Kayak.com said it has
arranged a $196 million financing deal with investors to help
facilitate the merger but did not disclose how much cash or debt
will change hands, or give definitive timetables on closing or
management changes.
The two brands will
continue to operate independently under their own names, Kayak said
in a release Friday, and SideStep employees -- it did not say how
many -- will join Kayak, the company said.
Travelers will
benefit, the companies suggested, through the combination of best
practices for each company and greater traveler access to "a larger
portfolio of products and services."
The deal will merge
two of the largest travel search engines in a move that could
significantly alter the competitive landscape for other smaller but
prominent players like Farecast, the Seattle Post Intelligencer noted in its
tech blog.
Kayak.com is
responsible for some $2.5 billion in travel bookings annually
through searches of discount travel opportunities. It reportedly
produces some $50 million in net revenue a year.
SideStep, which in
addition to comparison shopping, sells advertising and bills itself
as both an online travel search and a media company, generated $35
million in revenue last year according to published
reports.
The Kayak-SideStep
deal has some elements of complexity to it because of the number of
private equity firms involved in the development of the two travel
search engines.
Participants in the
$196 million financing round include Sequoia Capital, General
Catalyst Partners and Accel Partners, along with SideStep investors
Norwest Venture Partners and Trident Capital, the company
said.
New investors in the
deal include Oak Investment Partners and Lehman Brothers Venture
Partners, along with debt lenders Silicon Valley Bank and Gold Hill
Capital. The company did not detail the level of the investments by
firm, but it did say that Michael Moritz of Sequoia Capital will
join Kayak.com's board of directors.
Rob Solomon, in a
statement, said that SideStep was founded on the idea that
consumers want an "objective and comprehensive travel shopping
experience." He said that the merger would "help make that vision a
reality for mass market consumers."
Hafner, in a
statement Kayak.com released, predicted that the combination would
help introduce millions of new users to both sites.
"The commercial logic
of this deal is obvious," Hafner said. "Kayak.com is a technology
company focused on perfecting travel search, and SideStep.com is a
media company with in-house sales experience and user-generated
content."
He said that with the
merger, being carried out through a Kayak.com subsidiary, would
allow each of the companies to expand its offerings while still
focusing on individual strengths. He said that less than 10% of the
two companies' users overlap each other.
TechCrunch reported
that the deal is expected to take 60 days to close.
To
contact reporter Dan Luzadder, send e-mail to [email protected].