NEW YORK -- Cendant Corp., which owns both Budget and Avis, announced it has reached an agreement to purchase Orbitz Inc. for $27.50 per share in cash. The transaction has a fully diluted equity value of approximately $1.25 billion.

Orbitz is debt-free and, as of June 30, 2004, had approximately $200 million of cash on hand. The boards of directors of both companies have approved the transaction, but it is still subject to regulatory and other approvals.

Under terms of the agreement, a wholly-owned Cendant subsidiary would acquire all Orbitz outstanding Class A and Class B shares at $27.50 per share. Following successful completion of the tender offers, any remaining shares of Orbitz will be acquired in a cash merger at the same price.

"The transaction provides a foundation for significant synergies in technology, fulfillment and operations, which will allow both Orbitz and CheapTickets to continue to aggressively market and promote their respective brands while increasing profitability," said Samuel L. Katz, chairman and CEO of Cendant Travel Distribution Services Division.

"This transaction will deliver immediate and substantial value to all Orbitz shareholders," said Jeffrey Katz, chairman, president and CEO of Orbitz (who is unrelated to Samuel L. Katz). "The attractive premium reflects the quality and success of our unique and profitable approach to online travel."

Cendant said it intends to maintain both the Orbitz and CheapTickets businesses as separate consumer brands in the leisure travel sector. In the corporate travel sector, customers would be able to choose between Travelport and Orbitz for Business. Integration plans call for CheapTickets and Travelport to combine their technology platforms and operations to form a common platform with Orbitz, based in Chicago.