Kayak, which just completed its IPO in July 2012, initially filed to go public in November of 2010 but delayed the deal while looking for an improved market. Kayak’s stock closed at $31.04 on Thursday.

The company allows customers to compare travel prices across services, and is best known for its airline flight search, although it also does hotels and rental cars. Kayak processes more than 100 million user queries each month, it noted in the press release. The company was founded eight years ago by Paul English and CEO Steve Hafner. Priceline is one of the largest online travel sites in the world.

“A bomb just dropped in the online travel world,” wrote Rafat Ali of Skift. He noted that “Priceline will gain a great online and mobile team to build its portfolio and will put muscle behind the Kayak brand.”

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Hoberman’s PROFounders Capital vehicle is one of several investors in a funding round announced on Thursday, which brought in $2.5 million for the mobile-focused last-minute hotel booking service.

Other big names in the round included London’s DN Capital, SoftTech VC’s Jeff Clavier, former American Express global chief Charles Petruccelli and Carlos Domingo, the head of Telefonica Digital.

Not a bad lineup, considering Blink has only had its virtual doors open for the last six months. Already, the company offers last-minute hotel bookings in 39 cities across seven countries (Spain, Italy, Germany, the UK, Portugal, France and Ireland), with more than 400 hotels on its roster.

Customers get a choice of four hotels each night in each city – Blink says it does this so it can negotiate the best rates on exclusive terms, and that Blink reps personally visit the hotels before they are selected.

Blink has seen more than 160,000 downloads of its Android and iOS apps. It also claims to be the largest mobile reservations platform of its kind in Europe, and promises hotels that it’ll be giving them access to more than a million customers by the end of this year.

Going global

This mobile-led strategy is smart – after all, a truly last-minute booking will usually be made on the move – but there are rivals out there. These include Hotel Tonight and Priceline, and it would come as no surprise if Blink used its new reserves to take them on on their home turf.

The company said in the funding announcement that it would use the cash to improve its product and expand internationally. And, of course, most of those investors are from the U.S. and European countries outside of Spain.

Blink co-founder Rebeca Minguela used the funding statement to repeat a now-well-worn truism: that getting VC funding is a pain in mainland Europe.

“In Spain, private funding is more limited than in countries like the U.S. and valuations of start-ups are generally lower,” Minguela said. “This, coupled with bureaucratic obstacles, not only in Spain but in Europe, means that entrepreneurs have to rely on foreign funding or, in many cases, give up on their project.”

Of course, the funding is still there for countries on the Continent, even if it sometimes doesn’t come from local sources. For Hoberman and his co-investors, the Spanish VC scene’s loss might be their gain.

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Cars	Drive the next always-on gadget Katie Fehrenbacher	Work	Work is no longer a place Jessica Stillman
Stuff	Access trumps ownership Katie Fehrenbacher	Data	Data is the new digital currency Derrick Harris
Media	We are all media now Mathew Ingram	Identity	Identity is an industry Mathew Ingram
Body	Your doctor is a chip Stacey Higginbotham	Travel	Go anywhere, instantly Colleen Taylor
Web	The future web is alive Om Malik	Location	Where is the new who Ryan Kim

Images courtesy of Tesla Motors, DaveBleasdale, Petteri Sulonen, KatBPhotography, Urban Aquarium Video and Light, xurde, guiguis, kowitz, Marc_Smith, Aperturismo.

Go to page 2 (of 11) on GigaOM .

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1. Symantec is said to be buying the security division of VeriSign for about $1.3 billion.
2. Yahoo bought Associated Content for a rumored $90-$100 million.
3. Priceline bought TravelJigsaw, a Manchester, UK-based global online car rental agency that offers its services in 80 countries, for an undisclosed amount of money.
4. Playdom bought social game maker Acclaim for an undisclosed amount of money.
5. Cisco bought design house Moto for an undisclosed amount.

And if you look at some of the deals announced earlier, you know the M&A activity has been in full swing.

1. HP bought Palm for $1.2 billion.
2. SAP bought Sybase for $5.8 billion.

Last week Stacey pointed out the sudden spurt in acquisitions, especially in the cloud computing arena.

A focus on clouds, especially managing clouds in ways enterprise customers (GigaOM Pro, sub req’d) might want has led to several acquisitions so far this year on the part of big tech vendors like IBM, VMware and CA, all of which are looking to add new functionality in order to broaden their business. Hear more on these companies’ acquisitions strategies at our Structure 2010 conference June 23 and 24.

So what’s going on? Why this sudden urge to buy? Well, for the past 12 months or so, many large companies have been sitting on the sidelines, trying to get through what was arguably a heinous time in the economy by cutting costs and controlling margins. A typical (and safe) way to do this is by cutting one’s workforce and eliminating projects that cost money.

However, as the economy has turned, many large companies are trying to find ways to add newer products and thus goose up their business. Take, for example, Yahoo’s acquisition of content factory Associated Content is an effort to cash in on the slowly but steadily growing demand for display advertising. This is a short-term trade Yahoo is making in order to boost its advertising revenues.

I won’t be surprised if we see the drumbeat of deals get louder and louder. For startups that means one thing: good news.

Chart: Total Venture Backed M&A Deal Volume Through Q1 2010

This iChart shows the NVCA Q1 2010 release of the total venture backed mergers and acquisition (M&A) deal volume, together with the data of the past years – quarter view.

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At its peak, Priceline’s “name-your-own-price” business model created a stir. Its founder, Jay Walker, trumpeted the idea as a revolution that would upend the travel industry, and a lot of smart people bought it. George Soros and Paul Allen invested their money, and the stock surged to a $15.7 billion market cap, larger than most airlines. Forbes called Walker a “modern-day Edison,” and Priceline expanded into new markets like gasoline and groceries.

The revolution was over before it began. Priceline’s stock peaked nearly a year before the Nasdaq did, and it just kept falling: By the end of 2000, its market cap had shrunk by 99 percent to $220 million. Forbes regretted its praise for Walker, admitting he “hasn’t lived up to our label,” and Walker left the company soon after. Priceline backed out of the gasoline and grocery businesses, retreating to online travel, where it faced increasing competition from Expedia, Orbitz and others.

But writing off Priceline as another failed dot-com also proved premature. Its approach wasn’t revolutionary after all, but neither was it a bad idea. Somewhat ironically, it took another market crash for Priceline to begin to deliver on its promise. Its stock, which has risen 265 percent in the past year, has joined the S&P 500 — the market’s way of saying you’ve finally arrived. Its capitalization is back above $7 billion, making it larger than Expedia.

In the first six months of 2009, Priceline booked $4.3 billion in travel services, an increase of 12 percent during a period when overall bookings declined by 8 percent. The company will update those numbers for the third quarter next week, and analysts are expecting bookings to grow by more than 25 percent, faster than many of Priceline’s online rivals.

What changed for Priceline? Its management avoided the hype about the revolutionary potential of naming your own price. William Shatner and Leonard Nimoy did refer to it in commercials, but Priceline waited patiently for the concept to take root — the way Amazon has been patient about free shipping, or Netflix has been about streaming movies online with no extra fee. The company has also expanded piecemeal, buying up smaller companies like Bookings.com when it could, and expanding abroad. It now offers travel in 78 countries.

There’s a lesson in Priceline’s riches-to-rags-to-riches story for other Web companies. A lot of people watching tech companies — especially ones like me who write about them — get all antsy about their ability to deliver on their promise. This comes up when we talk about companies like Facebook not being public yet, or Twitter looking for revenue.

But often, consumers move at a much slower rate. It can take years to grow comfortable with a new business model. There is a lot to be said about moving quickly in a fast-evolving industry. But there’s just as much to be said about being patient with the people who are going to make you money.

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Get 25% off automatically when you purchase VMware Fusion online, using the coupon code “FusionRocks” for a limited time only.

VMware Fusion has been my recommendation for some time because of the wide support for guest OS’s including OS X Server, but the new Parallels Desktop 4.0 release does a lot to close the gap. I imagine the coupon is motivated in part by the increased competition from Parallels 4.0 this month.

Our own Darrell Etherington wrote up a comparison of VMware Fusion 2.0 and Parallels 4.0 where he slightly preferred Fusion. Now it is even a better deal at 25% off.

The coupon expires at midnight (Pacific time) at Sunday, November 30.

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I set out to compare fare-finding services and booking engines, including Kayak, SideStep, Mobissimo, Farecast, Priceline, Expedia and Hotwire. To do so, I chose three itineraries: a business trip to San Francisco, a trip from the U.S. to South America, and a one-way trip from India to the UK.

The winner? Mobissimo.

Itinerary 1: Business Trip from Denver to San Francisco

When I travel on business, the dates are usually inflexible, because I’m likely attending a conference or other scheduled meeting. I choose nonstop because business travel is hassle enough without lengthening the amount of time it takes to get there and back. But even though my primary concern is convenience, I’ll still have to justify my choice to whomever is footing my business bill. So cost matters.

I started with Kayak, which offered me a fare of $231 with one stop. But I wanted to go nonstop, and for that, it provided a fare of $333. I then used its “compare fares” feature to check on Expedia, Priceline and Hotwire. Nonstop fares on those sites were about the same as Kayak: right around $330.

Hotwire offered a “limited rate” fare of $219, but I wasn’t able to find out the carrier, the times, or whether or not I’d have to make stops — hardly ideal for the business traveler.

SideStep looked like it might have a winner for me, telling me that United had a nonstop flight available for $242. Clicking through, however, revealed that United’s nonstop fare was actually $333.

But then I checked with Mobissimo and Farecast, both of which found a nonstop flight with Frontier for $210! Wow! About a third less — Om would be pleased with my frugality.

The next time I make business travel plans, I’ll be sure to check those sites first — and maybe even go directly to the Frontier site myself. As useful as fare finders are, they’re even more useful if you combine them with some personal knowledge of which airlines most economically serve your favorite routes.

Winners: Mobissimo and Farecast.

Itinerary 2: Trip Home to Paraguay

My Paraguayan au pair is traveling home in February to visit her family before staying in the U.S. for an additional year. As a bonus for her hard work, we’ve offered to pay for her ticket, but obviously we’d like to keep the price low.

The dates for this trip are flexible, but the departure and arrival airports are not. I chose Feb. 15th-29th as the travel days, but with the hope that I could specify “flexible dates” and be offered cheaper days to travel.

Since Mobissimo and Farecast were so helpful with my business trip, I started with them. Mobissimo turned in a pretty good choice, of $1,155.69, and Farecast offered a fare of $1,303. Neither, however, gave me the option of classifying my dates as “flexible.”

Kayak and Priceline each found a fare of $1,140 with Brazil’s largest airline, TAM, while Expedia offered a TAM fare of $1,334. Hotwire doesn’t cover that itinerary.

I wanted to use flexible dates to see if I could find an even cheaper flight, but Expedia’s flexible dates checkbox only works with popular U.S. routes and anyway, it didn’t find the best fare for me in the first place. Kayak doesn’t offer a flexible dates capability. Kayak offers a flexible dates feature, but you need to sign up for a free account to access it.

Priceline made it easy to select alternate departure and return dates, though, so I ran the itinerary through again, shifting up by one day then shifting back by one day. I got the same result: $1,140 flying either United or US Air along with TAM to South America.

Winners: Priceline and Kayak. Close runner-up: Mobissimo.

Itinerary 3: One way from Bangalore to London.

For my third itinerary, I had to use my imagination. So I imagined someone beginning a new life in a different country, moving from India to the UK. Since Mobissimo did well for me with both my first two itineraries, I started with them, using a travel date of March 1st, 2008. It gave me a price of $457 through ebookers.com.

Priceline requires U.S. departure airports, so that was out. Hotwire doesn’t handle one-way tickets and only covers travel in the U.S. and Canada.

Kayak, SideStep, Farecast and Expedia all turned up fares around $460, with Farecast offering up the lowest option, at $455. But then I noticed that I could easily compare fares on Orbitz, Travelation and Cheap Tickets from the SideStep window.

It looked like I’d made a smart move. Using it, I discovered that Orbitz and Cheap Tickets each had available fares of $392, and Travelation had a $385 ticket for a flight on Gulf Air with just one stop! But when I looked closer I noticed that once you added on taxes, the price came up to $462 — almost exactly what I’d found before. It was a good reminder to always compare fares with taxes and additional charges added on.

Winners: Everyone except Priceline and Hotwire.

Overall winner: Mobissimo. It came within a few dollars of the low fare on every itinerary. If I were actually shopping for trips, though, I’d probably run the itinerary through all the sites, to make sure I didn’t miss any great fares.

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Today it became clear what that money was intended for: acquiring rival SideStep for about $200 million. SideStep and Kayak’s current investors, along with some new investors, are ponying up about $196 million, TechCrunch reports. The Wall Street Journal says SideStep will become a subsidiary of Kayak, and the two sites will be maintained and developed separately. Kayak gets SideStep’s travel guides, hotel reviews and a downloadable tool bar.

The two companies, once combined, will be profitable and will have $3.5 billion in transaction volumes. The combined entity will be the fifth -argest online travel operator. The combined company revenues are rumored to be over $85 million. At the rumored $700 million valuation I had heard, the combined company is valued at about eight time sales. What makes them more valuable than say, Expedia and Priceline, which have market caps of $9.2 billion and $4.5 billion respectively, and are valued at 4 times trailing 12-month sales.

Interestingly, the pre-merger Kayak’s traffic seemed to be in a bit of a swoon, according to Hitwise and comScore data. Leaving traffic trends aside, the new Kayak will face the same challenges as its bigger rivals.

Stifel Nicolaus & Co. analyst George Askew today cut his ratings on online travel sites, saying economic weakness and increasing competition will take its toll on the business. If it impacts the big three, then Kayak isn’t going to be immune from the bad news. He cited data that showed U.S. airline passenger counts were down for the first time in a year. Hotel bookings are down as well, and Askew believes that this points to “potentially lower discretionary income for consumers into 2008.”

You buy Askew’s prognosis? Are you planning to curb your enthusiasm for travel?

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