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 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.

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