The largest shareholder of Ctrip.com, the mainland's largest online travel site, is selling its stake after the company reported a 46 per cent gain in second-quarter profit.
Japanese online shopping mall operator Rakuten said it would sell its 20.3 per cent stake in Shanghai-based Ctrip, with the price to be decided on Friday. The deal is led by Morgan Stanley and co-managed by Citigroup.
Ctrip shares dropped 7.5 per cent on the news to US$40 in after-hours trading on Nasdaq, after the company's results beat expectations.
'Sales exceeded our forecast by 10 per cent and earnings were 19 per cent above our projection,' said Morgan Stanley executive director Richard Ji.
The price of the deal is expected to be about US$531 million, based on the latest share price. Rakuten, seeking to expand its business in the mainland, paid about US$109 million for its Ctrip stake in June 2004.
Dick Wei, China internet analyst of JP Morgan, said Rakuten might have sold its stake mainly because Ctrip's shares had risen strongly and further gains would be limited.
The stock has jumped about 91 per cent in the past 12 months, compared with 22.9 per cent by the benchmark Nasdaq composite index.