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Expedia Snaps Up Travelocity in $280M Cash Deal

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After complimenting each other's services for about a year and a half, Expedia and Travelocity are formally tying knot in an $280 million cash agreement.

During their business courtship Expedia's engine had been fueling Travelocity's search in the U.S. and Canada as a part of a 2013 partnership effort. In turn, Travelocity had been sending traffic to Expedia.

Expedia's $280 million cash buyout of Sabre's Travelocity will benefit all, says Expedia CEO Dara Khosrowshahi.

"Evolving this relationship strengthens the Expedia family's ability to continue to innovate and deliver the very best travel experiences to the widest set of travelers, all over the world," says Khosrowshahi.

Sabre CEO Tom Klein says his company's decision to sell Travelocity was the next step in a relationship that has proved fruitful.

"Our primary focus at Sabre is to provide mission-critical software solutions to our global airline, hospitality, and travel agency customers -- and to help them support their customers every day," says Klein.

Travelocity joins an Expedia portfolio that already includes notable brands such as Hotels.com, Hotwire, CarRentals.com, Egencia and eLong. Expedia rival Priceline is also gobbling up other travel companies to expand market share.

Priceline powered its growth through the acquisition of travel companies such as Bookings.com and Kayak.com. One of its most notable purchases was the acquisition of OpenTable for $2.6 billion.

Back in December of 2014 Priceline CEO Darren Huston said he's willing to consider more acquisitions. However, he noted Priceline isn't a "serial acquirer" and the company will avoid swelling from six brands to 15.

As Expedia grows into a stronger competitor and Priceline tempers the pace of its acquisitions, Orbitz has been prepping itself for sale. Just days before the Travelocity purchase was announced, a report stated Orbitz has been consulting with a financial analyst to ready itself for purchase.

Despite tidying up to attract suitors, the move shouldn't be interpreted as a bad thing for Orbitz, says Henry Harteveldt, a travel industry analyst at Atmosphere Research. While Orbitz may not be a failing business, it would likely need help from a larger organization in order to experience significant growth.

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