Microsoft buys travel site Farecast for $115M

Microsoft has acquired travel website Farecast for a rumored $115 million. The Seattle startup’s technology will likely be incorporated into the software giant’s site MSN Travel — even before the deal, Farecast had already partnered with MSN.

Farecast’s technology made it a pretty tempting target for acquisition. As we noted a year ago, the Seattle startup owns its niche of predicting airfares. At the time, we also said that some of the big tech players wanted to increase their presence in the market — looks like we were right, and that this course of events has worked out pretty well for Farecast.

There’s definitely been a lot of money pumped into online travel. For example, travel search engine Kayak raised $196 million and purchased rival site Sidestep for $193 million last December. Also, as we reported this morning, online travel organization site TripIt just received a fresh $5.1 million round of funding.

We’re getting the $115 million price tag from an article by Seattle Post-Intelligencer reporter John Cook, who cites an unnamed source. Earlier this week, he reported that a “secret buyer” wanted to acquire Farecast for more than $75 million. In an interview with Cook, investor Matt McIlwain of the Madrona Venture Group says Farecast received multiple offers, and he calls the deal a “home run”. No wonder — Farecast was funded for a total of $20 million from Madrona, Par Capital Management, Greylock Partners and others.

Chief executive Hugh Crean confirms the deal but offers few details here.

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