Here are some highlights of news items you might have missed today.
Priceline Books Deal to Acquire OpenTable
With ride-fetching app company Uber generating big publicity worldwide, online booking companies have become the darlings of the investment community. And today, the star stock of the day was certainly OpenTable Inc. (OPEN), which was up nearly 50 percent at $103.41 near midday after online travel company Priceline (PCLN) said it had agreed to buy the dining reservations company for $2.6 billion, or $103 a share.
OpenTable allows diners to book restaurant seats online, with more than 30,000 establishments signed up and 15 million diners using the service a month.
“OpenTable is a great match for The Priceline Group,” said Priceline CEO Darren Huston. “They provide us with a natural extension into restaurant marketing services and a wonderful and highly-valued booking experience for our global customers.”
This adds to Priceline’s stable of brands, which already features Booking.com, Priceline.com, Agoda.com, Kayak and rentalcars.com.
The move helps boost OpenTable shareholders, who had seen their shares fall sharply earlier in the year on fears of a tech bubble. That’s nice for investors, but it still remains to be seen for the entire sector whether a bursting of the bubble is next or further growth is coming for all of the online booking companies.
Gambling With This Acquisition
Speaking of M&A involving online companies, Toronto-listed Amaya Gaming Group (AYA.TO) soared more than 40 percent when it agreed to acquire the parent company of peer PokerStars for $4.9 billion in a deal that could make it one of the world’s largest online gaming companies.
Amaya, a gambling equipment and services company, will acquire privately held Oldford Group in an all-cash deal. Oldford is the parent company of Rational Group, the owner and operator of PokerStars and Full Tilt.
The New York Times DealBook column says the deal will likely allow the PokerStars and Full Tilt brands to re-enter the U.S.
Nearly three years ago, the Justice Department seized their websites and hundreds of millions of dollars owed to U.S. players, DealBook reports. “Online gambling was considered illegal in the United States for many years, but a reinterpretation of a federal law known as the Wire Act by the Justice Department in December 2011 opened the door for individual states to legalize online bets,” it reports.
Fears Over UK Housing Bubble Intensify
British leaders have issued the strongest warning yet about a potential housing bubble across the pond. George Osborne and Bank of England Gov. Mark Carney set out the danger signs of an incipient bubble: rocketing prices, lax lending and high debt.
In reaction, they vowed to give the Bank of England new powers over mortgage lending to prevent the exploding housing market disrupting the economy, Bloomberg reports.
“I want to make sure the Bank of England has all the weapons it needs to guard against risks in the housing market,” Osborne was quoted as saying. “I want to protect those who own homes, protect those who aspire to own a home, and protect the millions who suffer when boom turns to bust.”
A key move would allow the Bank of England’s Financial Policy Committee officials, should they believe that borrowers are being offered “excessive” loans, to limit the proportion of high loan-to-income mortgages that each bank can lend or even ban new lending above a specific multiple, Bloomberg quoted Osborne as saying. Should the FPC judge that a dangerous bubble is developing, they will also be able to set limits on loan-to-value ratios.
Housing prices continue to soar in the U.K., particularly in London, as the economy begins to heat up, and officials have been talking of an interest-rate rise sooner than originally predicted and much sooner than in other industrialized countries, something that could lead to appreciation of sterling.
Alcoa Soars After Broker Upgrade
Alcoa Inc. (AA) shares were among the leaders today, rising 3.6 percent after an upgrade by BMO Capital and as hope for increased demand for aluminum projects has improved sentiment on the stock. Alcoa is on the Top Stocks Under $10 portfolio, having risen sharply since the initial entry point of $9.42 to $14.51. To learn more about the Top Stocks Under $10 portfolio, click here.
The Money and Markets Team