After Priceline’s (PCLN) $2.6 billion deal for restaurant reservation service OpenTable (OPEN) hit the wires early Friday, a number of online and local-focused companies saw their shares jump. While traders may be hedging their bets, here are some reasons why three of these companies may be worth the investment.
Groupon
“At that type of premium, we believe the deal is evidence of increasing demand for local marketplaces like OpenTable that connect merchants and consumers,” Christopher Merwin, an analyst with Barclays, wrote in a note Friday about the 46% premium that Priceline paid for OpenTable.
Going local is becoming an increasingly important strategy for retail companies, especially if their business targets the right kind of customers. Groupon (GRPN) arrived early into the space by selling discounted products and services for merchants, and while the deals site has struggled as consumers soured on the idea, it has some useful technology that could interest a buyer.
The company recently launched a new point-of-sale system called Gnome that integrates payments, customer information and accounting software. If used in the right way, and perhaps without Groupon’s somewhat tarnished brand name, this could become a valuable tool to recruit merchants and provide them data to better reach and track customers.
Yelp
Shares of the business reviews site rose almost 14% Friday – a hefty jump. Like Groupon, its service is teaming with data about merchants and it is locally focused.
Any number of restaurant or retail focused buyers, especially a Priceline-like competitor, could win out by integrating Yelp (YELP) and its legions of devoted users. In the past, there have been rumors that the likes of Google (GOOG) and Yahoo (YHOO) were courting the company.
Google instead struck out on its own integrating customer reviews in its search. Any competitor looking to challenge Google’s hold on search could likely use a full-fledged review site.
Grubhub
This meal-ordering service is basically an OpenTable for your home. The only difference is that your meal is delivered to your doorstep. Grubhub, has its own online and mobile platforms that would be of interest to a larger company.
Priceline CEO Darren Huston said that mobile was a prime consideration in their hunt to buy OpenTable. Any company that is trying to appeal to a new generation of on-the-go customers needs to have a seamless mobile experience. Grubhub, (GRUB), whose shares rose sharply on Friday, comes with the tech mojo and 3.85 million unique users that could woo a multi-billion buyout.