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Kayak gets cold IPO feet, delays IPO indefinitely

The travel search company cites unfavorable market conditions as the reason for the delay

Financial trends and news by Faith Merino
September 30, 2011
Short URL: http://vator.tv/n/1fb1

Looks like a rocky market is giving Kayak second thoughts.  The company told AllThingsD Thursday afternoon that it is delaying its IPO until market conditions improve.  Kayak’s Chief Marketing Officer Robert Birge told Tricia Duryee that the company will keep its filing up to date with the SEC so that it can move when the market proves to be more favorable.

So if we all wake up on Monday and hear the announcement that “it’s cool guys, the market’s fixed.  Just had to turn it off and then turn it back on,” the Kayak guys will be prepped and ready to go.

A Kayak spokesperson declined to comment on what kinds of market improvements would give the green light for an IPO, or what alternatives the company is considering if the market fails to improve in the immediate future.  It’s also not clear how long Kayak is willing to wait (I hear that issue in Greece is not looking too good…).

Kayak filed last November to go public in an IPO worth $50 million, but over the last ten months, the company hasn’t given any signal that it’s ready to move ahead with the offering.

It doesn’t help that a lot has changed in the online travel booking industry over the last year.  Most notably, Google jumped into the game as a formidable competitor after its $700 million acquisition of ITA Software was approved in April. 

Earlier this month, Google showed off its plans for ITA Software with the unveiling of Google Flight Search, which allows web users to type in any kind of flight in the Google search box and get a list of flights, times, prices, and so on.  It’s cool—not a game-changer, but enough to make Kayak worry.

Last week, Kayak updated its SEC filing to include the risk that Google’s new Flight Search offering now poses to Kayak:

“Google has recently launched hotel and flight search tools and services that directly compete with the tools and services we offer. Google’s flight search offering appears to include significantly increased speed on return of search results and, in the future, may include other enhancements or improvements in performance of the ITA software which may not be made available to us,” the company explained. 

Because Kayak licenses ITA software for its flight search results, this could be a problem.  While it has the right to renew its existing ITA agreement, there is the very real possibility that Google or ITA might limit Kayak’s access to software improvements or develop separate replacement software just for Google to which Kayak and other travel search engines will not be given access.

If Kayak can’t get its hands on a comparable technology, “we may be unable to operate our business effectively and our financial performance may suffer.”

So, for now, the IPO plans remain on hold until Kayak sees more favorable market conditions (maybe Google’s Flight Search division will spontaneously combust?) or can come up with a viable alternative.

 

Image source: forbes.com


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