The Breakdown

Explaining Southern California's economy

Priceline buys Kayak — and a San Diego law firm promptly investigates

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The giant online travel site Priceline announced last week that it’s spending a whopping $1.8 billion to buy upstart Kayak. (If you do your math the Silicon Valley way, that's almost two Instagrams — Facebook bought the photo-sharing app for $1 billion earlier this year).

This means that Kayak, which staged at multi-million-dollar IPO in July, is no longer a public company. Is that a good deal for shareholders? One law firm in Southern California doesn't think so. But that could have been predicted.

Within a day after Connecticut-based Priceline and Kayak announced the deal, Robbins Umeda, a San Diego firm that specializes in shareholder lawsuits, launched what it’s calling an “investigation” of the proposed acquisition.

Robbins Umeda does this all the time, advising shareholders that they have the right to file class-action lawsuits if mergers and acquisitions rob them of gains. 

 When it comes to Priceline and Kayak, shareholders who might be offended at Priceline’s offer of $40 a share, a substantial premium, might have a case. Kayak, founded in 2004 and also based in Connecticut, had been posting big gains, with revenue up almost 30% in its third quarter. 

Shareholders will never know if they could have ridden that rocket above $40 a share. But Kayak’s founders will know what it feels like to go from startup to initial public offering to acquisition in eight short years.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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