Priceline is acquiring Kayak for $1.8 billion in cash and equity, the two companies announced Thursday after the stock market closed.
Priceline, an online travel booking service, will pay $500 million in cash and $1.3 billion in stock options to acquire Kayak. That works out to be about $40 per share paid out to Kayak's shareholders.
Kayak launched eight years ago and went public in July at $26 a share. The company's stock has bounced around since then, ending Thursday at around $31 a share.
The boards for both Kayak and Priceline have reportedly approved the acquisition and the deal is expected to closed by the first quarter of 2013.
Based on the announcement, it appears the plan is for Kayak to remain in operation and grow under Priceline's ownership.
"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," said Steve Hafner, Kayak's CEO and co-founder, in a statement.