Online travel agency Expedia said it would buy rival Orbitz for about $1.38 billion in cash as it looks to increase its customer base in a highly competitive travel industry.
Orbitz’s shares shot up 22.5 percent to $11.79 in premarket trading, slightly shy of Expedia’s offer of $12 per share. Expedia’s shares rose nearly 10 percent to $85.99.
“We are attracted to the Orbitz Worldwide business because of its strong brands and impressive team,” Dara Khosrowshahi, chief executive of Expedia, said in a statement.
Orbitz, the operator of the CheapTickets website, was exploring a sale and had engaged financial advisers to reach out to potential buyers, Bloomberg had reported last month.
Expedia, which recently slipped behind Priceline to become the world’s second largest travel services company by bookings, has expanded rapidly by buying Travelocity last month and the Wotif Group in November 2014.
The deal has an enterprise value of $1.6 billion, the companies said in a joint statement.
The equity value of the deal is based on about 115 million Orbitz shares outstanding as of Dec. 31.
(Reporting by Ankit Ajmera and Sweta Singh in Bengaluru; Editing by Savio D’Souza)
This article originally appeared on Recode.net.