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By Frederic Lardinois

Online travel site Priceline.com (PCLN) announced that it has agreed to acquired the travel search engine Kayak, which is operated by Kayak Software (KYAK), for $1.8 billion. Priceline will pay $40 per share for Kayak. About $500 million of the purchase price will be in cash and the other $1.3 billion in equity and stock options.

Kayak was founded in 2004 by a team of online travel industry veterans, including CEO Steve Hafner, a co-founder of Orbitz; CTO Paul English, a former VP of technology at Intuit; Chairman Terrell Jones, founder of Travelocity; and Director Greg Slyngstad, founder of Expedia. The company received a total of about $229 million in venture funding for major Silicon Valley firms, including General Catalyst Partners, Sequoia, Accel Partners, and others. The company had its IPO this August and currently processes about 100 million user queries per month.

Durin ga conference call about the acquisition, Priceline noted that Kayak will continue to operate independently. Kayak, Priceline argued, will profit from this partnership in its plans to expand internationally. Priceline also noted that this transaction will help Kayak to get deeper into the hotel business.

"Paul English and I started Kayak eight years ago to create the best place to plan and book travel," said Steve Hafner, Kayak Chief Executive Officer and Cofounder in a canned statement. "We’re excited to join the world’s premier online travel company. The Priceline Group’s global reach and expertise will accelerate our growth and help us further develop as a company."

For Priceline, this is a rare acquisition. The company has only acquired four companies so far: Agoda.com, Booking.com, TravelJigsaw, and Active Hotels. The stock market has reacted rather negatively to the news, with Priceline’s stock down about 2% in after-hours trading yesterday.

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Source: Priceline.com Acquires Kayak For $1.8 Billion, Kayak Will Continue To Operate Independently