Headline Feeds
In a deal 
that could help speed its expansion
into Asian markets, Priceline.com
(Nasdaq: PCLN) announced
Tuesday that two Hong Kong conglomerates
have agreed to buy an additional 25
million shares in the company from the
Priceline founder Jay Walker and his
trust.
Hutchison Whampoa Limited and Cheung Kong (Holdings) Limited (CKH) said the purchase, which is subject to regulatory approval, will boost their joint stake in the Norwalk, Connecticut-based e-tailer to 30 percent.
As a result of the stock acquisition, Hutchison and CKH will become Priceline's largest shareholder, and will gain two more seats on its board of directors.
"We're at work now to introduce Priceline-like services into the Asian market and our work is progressing," Priceline spokesperson Brian Ek told the E-Commerce Times.
Ek declined to specify whether a timetable had been set for its Asian expansion plans.
Growth Strategy
"Priceline.com becomes an even stronger company through this transaction, because it enables us to broaden our relationship with strategic partners who have existing strengths in industries and technologies important to [the company's] future growth," Priceline chairman Richard S. Braddock said.
Braddock added that the deal underscores the company's "commitment to the
success of [its] business model on a global scale."
Earlier this year, Priceline rolled out a UK site, and plans to penetrate other European markets later this year.
Repeat Buyer
In February, Hutchison and CKH -- both of which are controlled by Hong Kong tycoon Li Ka-shing -- jointly purchased approximately 24 million shares of common stock from Priceline at $2.10 per share.
In addition, the two bought roughly 11.3 million shares from Walker for a total of almost $24 million. The financial terms of the current deal were not disclosed.
Prior to Tuesday's transaction, Hutchison and CKH held a 17.54 percent stake in the e-tailer, and Hutchison had one seat on its board of directors. After the sale, Walker, who stepped down from his role as vice chairman of Priceline in December, will hold almost 15 million shares in the company.
Asia Investment
Hutchison owns approximately 65 percent of Hutchison-Priceline Limited, the companies' Asian venture.
"The more we have come to know Priceline.com through our seat on the board and our venture in Asia, the more confident we are about the company, its business model, its brand and long-term growth prospects," said Hutchison group managing director and CKH director Canning Fok.
Hutchison is a multinational that operates five core businesses in 34 countries, including telecommunications and e-commerce, property and hotels, retail and manufacturing, energy and infrastructure, and ports and related services.
CKH's major businesses consist of property development and management, as well as information technology and Internet operations.
Stock Surges
Investors welcomed news of the deal. In early trading Wednesday, Priceline stock surged $1.12, or about 20 percent, to $6.57. On the heels of Tuesday's announcement, Goldman Sachs raised its estimates for Priceline's second quarter, saying that the "worst is behind" for Priceline.
"We continue to believe that management has 'right-sized' the business, improved customer service, and stabilized growth, resulting in an overall improved outlook with Q1 2001 being Priceline's last unprofitable quarter," Goldman Sachs analyst Anthony Noto wrote in a research note.
The investment firm said it expects Priceline to bring in $315 million, or 3 cents per share, in revenue for the second quarter, up from its earlier estimate of $304.8 million, or 2 cents per share. According to Noto, the Hutchison and CKH stock acquisition, as well as a recent stock purchase by Priceline chief financial officer Robert Mylod of 50,000 shares for roughly $250,000, signaled "confidence" in the e-tailer's progress.
Although Priceline stock still trails its 52-week
high of $49.25 per share, it has
managed to bounce back in recent months from a record low
of just over $1 per share.
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