Kayak buys SideStep

January 06, 2008 | Online Travel

The combined company will be profitable with $3.5 billion in transaction volumes and will be the fifth-largest online travel operator. Revenues are estimated to be around $85 million (Kayak $50 million and SideStep $35 million).

Kayak.com announced the completion of a $196 million financing round. The travel search engine will use this investment to complete a merger with SideStep, Inc. and to pursue a more aggressive worldwide expansion.

“This transaction combines the two biggest brands in travel search, which would make Kayak.com and its affiliate sites the fifth largest travel brand, with more monthly unique visitors than Priceline, every airline except Southwest, and every hotel and rental car brand (Based on comScore Media Metrix Digital Calculator Report for unique visitors during the month of November 2007). Consumers will conduct more than 33 million searches on Kayak.com and its affiliates in January 2008, up from 16 million in January 2007,” stated a release.

Kayak.com intends to maintain both the SideStep.com and Kayak.com brands and will develop and promote each site independently, with key SideStep.com personnel joining Kayak.com’s team.

“The commercial logic of this deal is obvious,” said Steve Hafner, Kayak.com CEO and co-founder. “Kayak.com is a technology company focused on perfecting travel search, and SideStep.com is a media company with in-house sales expertise and user-generated content. By merging, each brand can improve its offering while continuing to focus on its individual strengths. With less than 10% overlap between existing Kayak.com and SideStep.com users, each site stands to gain millions of new users.”

As part of this transaction, Michael Moritz of Sequoia Capital will join Kayak.com’s Board of Directors.

“Kayak.com has become the Internet’s best destination for clear and objective travel information,” said Michael Moritz, Partner at Sequoia Capital. ” Kayak.com’s merger with SideStep.com reshapes the largest sector in online commerce.”

Other participants in the financing round include existing Kayak.com investors General Catalyst Partners and Accel Partners, SideStep investors Norwest Venture Partners and Trident Capital, new investors Oak Investment Partners and Lehman Brothers Venture Partners, and debt lenders Silicon Valley Bank and Gold Hill Capital.

Kayak.com currently has websites in the UK, France, Germany and Spain, and will soon launch in Italy. SideStep.com’s website in Ireland and its European affiliates will add to Kayak.com’s global business.

Kayak.com shared that it will also announce several anchor affiliate deals in Europe in the coming months and is currently evaluating opportunities throughout Europe and Asia.

Related Link: Kayak Consolidates Travel at Seeking Alpha