Travel Giant Priceline Acquires Kayak

Planning early for spring and summer travel plans? Well, hold tight because you may have more options for cheaper flights soon. Travel giant Priceline has acquired travel favorite Kayak to create the ultimate online travel shopping experience.

Priceline acquired Kayak for $1.8 billion, $500 million paid in cash and $1.3 billion paid in assumed stock options in the company. Kayak will operate as a separate entity under the Priceline Group umbrella.

The news comes as a shock to analysts. Norm Rose, president of Travel Tech Consulting told USA Today that the announcement is a “bombshell.” For one, Priceline actually sells tickets, while Kayak acts as a travel agent of sorts — referring people to other travel agents or directly to the airlines. It is not exactly sure how the two will jibe together.

“For the travel industry, it’s a big deal because of all the dynamics about distribution,” Rose said in USA Today. “For the consumer, it’s not as big a deal, other than that having Priceline behind Kayak is a very strong combination. That can only lead to more innovation and more choice.”

All of this change is just another signifier that the airlines industry, as we know it, is a changing. Airlines are consolidating more and more and analysts expect the trend to continue.

Kayak’s shareholders and regulators still have to give approval. If all goes well, the deal will be finished at the end of first quarter 2013.