Kayak, SideStep Will Travel Together in Rare East-Buys-West Acquisition

12/21/07Follow @wroush

In one of the largest venture-backed deals of the year, discount travel search site Kayak.com, based in Norwalk, CT, has raised $196 million to purchase rival SideStep of Santa Clara, CA. While the two companies’ websites will continue to operate separately, according to a press release issued today, the combined organization will control the Web’s fifth most popular travel brand, with “more monthly unique visitors than Priceline, every airline except Southwest, and every hotel and rental car brand,” according to Kayak.

A gaggle of investors and bankers from both coasts contributed to the deal, including existing Kayak funders Accel Partners, Cambridge’s General Catalyst Partners, and Sequoia Capital; existing SideStep investors Norwest Venture Partners and Trident Capital; new investors Lehman Brothers Venture Partners and Oak Investment Partners; and lenders Gold Hill Capital and Silicon Valley Bank. Sequoia’s Michael Moritz will join the Kayak board of directors.

Kayak’s search engine combs hundreds of travel sites for the best prices on flights, hotels, rental cars, and cruises. The company earns money when consumers click on the ads displayed alongside search results, which bring a high rate because Web users researching travel plans are considered to be highly qualified, goal-directed sales leads. SideStep searches fewer sites but provides user-contributed reviews of thousands of companies and destinations. The overlap between the two companies’ user bases is less than 10 percent, according to Steve Hafner, Kayak’s CEO and co-founder.

“The commercial logic of this deal is obvious,” Hafner said in a statement announcing the deal. “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.”

Kayak co-founder and CTO Paul English added: “As a native Bostonian, I am also personally gratified to finally see an East Coast technology firm purchasing a West Coast counterpart.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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