RealTime IT News

Priceline Soars On Institutional Stock Deal

Priceline.com stock was soaring Wednesday after Hong Kong companies Cheung Kong Holdings Ltd. and Hutchison Whampoa Ltd. agreed to buy more than 25 million shares from the e-commerce company's founder, Jay S. Walker and his trust.

The company's stock was also sent skyward by a report from analysts at Goldman Sachs, which raised priceline.com's second quarter revenue and earnings per share estimates to $315 million and 3 cents a share. The previous estimate was about $305 million and two cents a share.

The stock bounced up 69 cents or about 12 percent in the first minutes of trading, to $6.14. It later hit $6.59, up $1.14.

Last February, CKH and Hutchison purchased approximately 23.8 million shares of the name-your-own-price retail business from priceline.com and an additional 11.3 million shares of priceline.com stock from Walker, who is no longer with the company.

Hutchison is an international conglomerate with a market capitalization of $46 billion. Its holdings include telecommunication properties, shipping assets and resort hotels. Cheung Kong is the largest real estate holder in Hong Kong, and along with Hutchison is owned by Li Ka Shing, said to be the richest man in Hong Kong.

Hutchison already has joined with priceline.com in an alliance to bring the company's e-commerce business model to 2.6 billion consumers in Asia.

As a result of both stock transactions, CKH and Hutchison each hold about 15 percent of priceline.com. Separately, Hutchison also owns approximately 65 percent of Hutchison-Priceline Limited (HPL), the Asia venture.

CKH and Hutchison will receive a total of two additional seats on priceline.com's board. Hutchison already has one seat.

"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 priceline.com's future growth," said priceline.com Chairman Richard S. Braddock. "Priceline, Cheung Kong and Hutchison share a vision and commitment to the success of priceline.com's business model on a global scale."

Meanwhile, Goldman Sachs said it raised its estimated for several reasons, including favorable industry dynamics, continued progress on the turnaround, and "a clear signal of management's confidence given the recent purchase of 50,000 shares by Bob Mylod, the CFO."

"We maintain our view that led to our upgrade of PCLN on May 1 from market perform to market outperform that the worst is behind the company. PCLN has right-sized the business by focusing on travel, improving customer service and has installed financial disciplines," GS told its clients in an advisory.