Giving in to the realities of the stock market's pricing, Sabre Holdings Corp. raised its tender offer for the outstanding shares of online travel operation Travelocity.com Inc. from $23 to $28, and this time, Travelocity said yes.

Sabre said it has also entered into an agreement in principle with plaintiffs to settle all pending shareholder litigation over the deal, subject to court approval.

Fort Worth, Texas-based travel services company Sabre, which actually founded Travelocity and then sold a chunk of its stock, made an unsolicited bid in mid-February to acquire the Travelocity shares that it doesn't already own for $23 a share.

Sabre currently owns approximately 70 percent of Travelocity's stock. But the price on the open market kept climbing and closed last Friday at $26.90 a share. Naturally Travelocity shareholders were less than thrilled with a $23 offer and the company was hit by a variety of shareholder lawsuits.

The matter nearly became a hostile takeover bid as Travelocity's board called the offer "an opportunistic attempt to acquire Travelocity at a time when its stock price is temporarily depressed..." The board hired outside advisers to help fed off the move from Sabre.

Now, however, Travelocity's board of directors has recommended that stockholders accept Sabre's amended offer.

The big travel reservation company said it has "determined that the long-term strategies of Sabre and Travelocity are converging. The move supports Sabre's continuing strategy to deliver value to suppliers and travelers across multiple distribution channels."

Sabre has said it wants to combine the strengths of both companies to pursue new revenue opportunities, while optimizing investment decisions. Travelocity would become a wholly owned Sabre company. Sabre does not plan to change Travelocity's executive team, strategic direction or brand.

Travelocity, also based in Fort Worth, posted pro forma income of 9 cents per share for its fourth quarter on gross travel bookings of $630.2 million.

Travelocity began trading on Nasdaq in March 2000 after completion of its merger with Preview Travel. It was launched by Sabre in 1996.