Cendant will pay $27.50 a share for Orbitz. The New York company said in a press release Wednesday that the all-cash transaction will make it the No. 2 online travel agency. Cendant already owns a range of travel brands including Avis and Days Inn, as well as the Century 21 Real Estate operation.

The confirmation comes a day after various news agencies reported the companies were in advanced talks on the deal. Shares of Cendant surged 31% in early action Wednesday on the latest development.

"The Orbitz acquisition fits perfectly with Cendant's articulated goal to be among the leaders in every business in which we participate," said Ronald L. Nelson, Cendant's CFO. "We will use the proceeds from the sale of Jackson Hewitt, a noncore unit, along with additional cash on hand, to acquire a strategic asset with near- and long-term growth opportunities.

"The transaction also meets all of our previously defined acquisition parameters," Nelson added. "It is strategic to our Travel Distribution Services Division; it substantially strengthens our competitive position by adding management talent and enhancing our travel technology capabilities; and it is accretive within the first year of the acquisition."

The pact could further shake up the ever-evolving online travel business, which is already populated by giants such as Barry Diller's mellifluously named IAC/InterActiveCorp (IACI - commentary - Cramer's Take) and the 2004 hot stock Travelzoo (TZOO - commentary - Cramer's Take). Ironically, hopes for the sector have remained buoyant even as the traditional airline industry struggles to fight off the grim reaper of low-fare economics. Big old-line carriers such as Delta (DAL - commentary - Cramer's Take) own more than half of Orbitz, which came public last year in a much-applauded initial public offering.

"I think this makes a lot of sense for Cendant," says Ethan McAfee, director of investment research for Ramsey Asset Management, an Orbitz shareholder.

With Orbitz's chief competition in the online travel segment being IAC's Expedia and Sabre's (TSG - commentary - Cramer's Take) Travelocity, "This was kind of the last big guy out there," says McAfee. "This is a great way for them to acquire the last remaining independent online travel company at a very low valuation."

Cendant already owns several lesser online travel properties, including CheapTickets.com, Lodging.com, HotelClub and RatesToGo.com.

As for Orbitz, McAfee calls Cendant "a good acquirer for them," noting the "fairly sizable premium" to Orbitz's current market price.