Priceline slides post-OpenTable; Street thinks more deals possible


Priceline's (PCLN -2.8%) market cap has fallen by $1.6B since announcing a $2.6B deal to buy restaurant reservation leader OpenTable.

With shares of many other local services firms following OpenTable higher - Yelp is up 13.8% - the Street is betting Priceline's move will spark further M&A activity, with some of it possibly coming from Priceline.

"We see this deal as likely part of Priceline's move into offering a much broader range of local e-commerce services to what is a very attractive customer set," writes RBC (Outperform).

OpenTable's platform supports 31K+ restaurants and seats 15M+ diners/month. The company towers over the U.S. market, but is seeing growing competition from Yelp, TripAdvisor (TRIP - just bought European leader LaFourchette), Groupon, and other firms going after restaurants unhappy with OpenTable's pricing.

In spite of the steep price tag - Priceline is paying 9.9x 2015E sales - analyst commentary is mostly positive. Not surprisingly, much of it centers around cross-selling opportunities between OpenTable and Priceline's travel bookings offerings.

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