March 13, 2013 / 4:41 PM / 5 years ago

UK antitrust review delays Priceline's deal to buy Kayak

(Reuters) - Online travel agency’s (PCLN.O) $1.8 billion (1.2 billion pounds) deal to acquire smaller rival Kayak Software Corp KYAK.O, which was expected to close this month, will be delayed due to a prolonged review by UK antitrust regulators.

The UK Office of Fair Trading (OFT) has told the companies that the administrative deadline for its review is expected to be in May, Priceline said on Wednesday.

Priceline, which expected the deal to close in the first quarter of 2013, did not say why the review was delayed. Company spokesman Brian Ek declined to comment.

Ascendiant Capital Markets analyst Edward Woo said the delay could be because of the OFT’s 2012 investigation of online travel agencies.

Britain’s consumer watchdog alleged in July that Priceline’s hotel reservation site,, and Expedia (EXPE.O) broke European and UK competition laws by signing deals with InterContinental Hotels Group (IHG.L) that limited the discounts offered on hotel rooms.

Priceline has denied the allegations. It expects the decision on whether the OFT will file charges in the second half of 2013 at the earliest, according to its annual report dated February 27.

“This may be part of why the review is taking a couple of months longer than expected,” Woo said. “I think the merger will be approved.”

Expedia recently completed a deal to buy majority interest in German hotel site trivago GmbH for about $632 million (423 million pounds) without any antitrust issues.

    The Priceline-Kayak deal, announced in November, received U.S. antitrust approval in early January.

    Kayak shareholders approved the deal earlier this month.

    Priceline, known for its name-your-own-price auction, is buying Kayak to boost its travel research and advertising capabilities.

    Priceline’s shares, which have gained about 15 percent since announcing the Kayak deal, fell 0.5 percent to $719.97 on Wednesday on the Nasdaq. Kayak’s shares were trading down slightly at $40.65.

    Reporting by A. Ananthalakshmi and Mridhula Raghavan in Bangalore; Editing by Roshni Menon

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