Expedia has agreed a deal with lastminute.com's American parent Travelocity in which it will operate its US and Canadian websites.
The strategic long-term agreement will see Expedia's technology run the rival Travelocity sites and gives it access to its supply and customer service.
Travelocity will remain owned by Sabre Holdings Corp and the agreement does not include lastminute.com in Europe or the Travelocity Partner Network.
The announcement comes after a short period of speculation that a major acquisition was in the offing in the online travel agency sector.
Expedia chief executive Dara Khosrowshahi said: "Over the years, Travelocity has become one of the most recognised travel brands in the US and Canada.
“Going forward, this agreement will enable Travelocity to focus on further building its brand while at the same time providing consumers with an enhanced suite of travel products and services.
"This announcement stands as a true testament to the advanced capabilities that our significant technology investments over the past several years enabled us to build.
“We believe volume generated through the agreement will add further scale to Expedia's global supply and customer service capabilities."
Carl Sparks, president and chief executive of Travelocity Global added: "Since launching in 1996, Travelocity has grown from a pioneering internet start-up to one of the leading brands in travel.
"In staying true to our core values of meeting the needs of both consumers and travel suppliers, we have elected to evolve and strengthen our business model in the US and Canada by working with Expedia to offer a top-notch booking platform and a more robust supply of travel options, allowing us to focus increased resources on building our competitive strengths in marketing and retailing."
According to reports from the US plans to develop the joint venture will begin immediately, with an expected launch in 2014.
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