Will OpenTable Get A Higher Offer?

Shares of OpenTable OPEN are up almost 48 percent to $104.17 per share after Priceline OPEN announced it would buy each share for $103.

If traders did not expect another offer, shares would be trading at or below $103 to account for the time value of money and probability the deal would fall apart. With OpenTable shares trading a percent over the acquisition price, traders may be speculating on another offer.

This bullishness may be more a result of market sentiment than the probability that another bid will take place. 2014 has been filled with acquisitions, including more than one high profile case where offers flew back and forth for the company being bid on. Hillshire HSH, for example, received an initial offer for $45 per share and received a final $63 per share offer last week.

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When looking at the possibility of another deal, there are not many companies in the space that could make an offer greater than $2.6 billion for OpenTable. Looking quickly at market cap, Priceline is a giant in the industry with a $64 billion market cap: Tripadvisor has a $14.5 billion cap, Expedia’s is $9.6 billion and Orbitz has just a $882 million cap. Some are speculating that a private equity fund may want to take OpenTable out, but the firm does not have characteristics of a typical PE target: earnings are up 21 percent (faster than revenue) over the past year, fundamental ratios are very high and margins are already far above the industry average.

In addition, because the boards of both companies have approved the transaction, there is probably a termination fee.