VCs to See Nice Return from Priceline’s Kayak Purchase

Venture investors in Kayak Software, who had been holding their shares following its July IPO, will be seeing a generous return now that Priceline.com is acquiring the company.

Norwalk, Conn.-based Priceline announced Thursday that it will purchase Kayak for $1.8 billion in cash and stock, at the time a 29% premium over the public market valuation. The offer provides a big boost for VCs, who were already counting 8-year-old Kayak, which had raised just over $228 million from private investors, as a positive return.

Kayak, which is also based in Norwalk and operates a website and mobile applications for comparing airline, hotel and rental car prices, is majority-owned by its venture backers. The largest shareholders, and their value of stakes at a $1.8 billion valuation, is as follows:

  • General Catalyst Partners: The firm was an investor in Kayak’s earliest funding rounds, and owns 27% of shares, a stake valued around $486 million at Priceline’s offer price.
  • Sequoia Capital: The firm invested in early and later stage rounds through multiple funds. It owns 16% of Kayak, worth about $290 millon.
  • Accel Partners:  The firm owns a 14% stake in the company through its Accel London II fund, worth about $250 million.
  • Oak Investment Partners:  Oak was a later stage investor in Kayak and owned 10.6% of the company, worth about $190 million.

Neither Kayak nor its backers had filed for a secondary offering of shares following the IPO. None of the VCs sold shares in the initial public offering.

Boards of both Kayak and Priceline unanimously approved the transaction.

Photo courtesy of Shutterstock

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