Cheung Kong and subsidiary Hutchison Whampoa increased their joint stake in US-based name-your-price online travel company Priceline to 30 per cent, up from 17.54 per cent, signalling a strong vote of confidence in Priceline.
Since Priceline dropped its money-losing groceries and petrol product categories to refocus on its core product lines selling hotel rooms and airline tickets, its losses have narrowed and the US Nasdaq-listed company expects to be profitable in the second half of the year.
While its stock remains depressed from its 52-week high of 51.50 per share almost a year ago, it has enjoyed a strong bounce back from its all-time low of just over US$1.
In February, Hutchison and Cheung Kong rescued the troubled online travel services company with a US$73.5 million investment.
The two companies had entered a joint venture with Priceline a year ago in January. Priceline had set up a US$20 million joint venture with Hutchison to introduce its services to Asia. Priceline was to receive a licensing fee based on a percentage of sales in exchange for use of its unique 'name-your-price' business model.
Cheung Kong and Hutchison also obtained exclusive rights to negotiate for setting up the Priceline model in Japan. As a result of Tuesday's increased stake, they will get two seats on the Priceline board.