Inc (NASDAQ:PCLN), a leading global online travel reservations company, agreed to buy Kayak Software Corp (NASDAQ:KYAK) for $1.8 billion, at $40 per share.

The stock price of Kayak increased by nearly 28 percent to $39.67 per share on Friday, after trading hours.

The acquisition price is 29 percent above Kayak’s stock value at $31 per share on Thursday. Under the terms of the agreement, Inc (NASDAQ:PCLN) will pay $500 million in cash, and $1.3 billion in equity and stock options.

Priceline logo

According to Inc (NASDAQ:PCLN), the current management team of Kayak Software Corp (NASDAQ:KYAK) will remain and continue to supervise the business operations of the company. Kayak will become an independent subsidiary of the Priceline Group of Companies.

In a statement, Priceline Group president and chief executive officer, Jeffery H. Boyd, said, “Kayak has built a strong brand in online travel research and their track record of profitable growth are demonstrative of their popularity with consumers and value to advertisers.

Boyd added, “Kayak Software Corp (NASDAQ:KYAK) has world class technology and a tradition of innovation, building great user interfaces across multiple platform and devices. We believe; we can be helpful with Kayak plans to build a global online travel brand.”

On the other hand, Kayak cofounder and chief executive officer, Steve Hafner stated, “Paul English and I started KAYAK eight years ago to create the best place to plan and book travel. We’re excited to join the world’s premier online travel company”.

The board of directors of the two companies approved the transaction, which is subject to the approval of the shareholders of Kayak, customary closing conditions, and regulatory approval. Both companies expect to close the transaction in the first quarter of 2013.

Kayak Software Corp (NASDAQ:KYAK)  is a travel research site that allows consumers to compare hundreds of travel sites offering hotels, flights, and car rental reservations in just one click. The company announced its agreement with Inc (NASDAQ:PCLN) during its third quarter earnings conference on Thursday.

During the third quarter, Kayak Software Corp (NASDAQ:KYAK) posted $78.6 million revenue, a 29 percent increase from its $61.2 million revenue during the same period a year ago. Its net income was $8.1 million, 14 percent higher than its $7 million net income in 2011. Kayak’s third quarter EPS was $0.19 (GAAP).

According to Hafner, Kayak Software Corp (NASDAQ:KYAK) generated record revenue and profits during the third quarter. He also emphasized that the company’s investments in product development, marketing, geographic expansion, and mobile applications are delivering positive results.