Kayak.com And SideStep.com Agree To Merge

Competing through consolidation, Travel comparison sites Kayak.com and SideStep.com agreed to merge late last week.

On Friday, Kayak said it had raised $196 million in financing led by Sequoia Capital, which is enabling its merger with SideStep, along with future expansion and intentions to enhance its services for travelers in search of rates and availability data.

"Kayak.com's merger with SideStep.com reshapes the largest sector in online commerce," said Michael Moritz, Partner at Sequoia Capital, who is joining Kayak's board of directors as part of the deal.

Kayak and SideStep are both "meta" travel sites that search hundreds of travel Web sites, including airlines, hotels and sites such as Orbitz.com and Expedia.com. SideStep will become a subsidiary of Kayak, while Kayak will maintain and develop each site separately.

By Kayak's estimate, the merger will make the combined entity the fifth-largest travel site in search volume. Kayak reports that there is less than 10% overlap among Kayak and SideStep users.

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Consumers are expected to conduct some 33 million searches on Kayak.com and its affiliates during January 2008--up from 16 million in January 2007.

"The commercial logic of this deal is obvious," said Steve Hafner, Kayak.com CEO and co-founder. "Kayak.com is a technology company focused on perfecting travel search, and SideStep.com is a media company with in-house sales expertise and user-generated content."

Other participants in the financing round include existing Kayak.com investors General Catalyst Partners and Accel Partners, SideStep investors Norwest Venture Partners and Trident Capital, new investors Oak Investment Partners and Lehman Brothers Venture Partners, and debt lenders Silicon Valley Bank and Gold Hill Capital.

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