China’s Ctrip expands global reach with US$1.74bn Skyscanner takeover
Majority cash deal for Edinburgh-based travel site is first US$1bn overseas deal by Chinese online travel company
Ctrip.com International, China’s leading online travel website, is planning to buy British peer Skyscanner for around £1.4 billion (US$1.74 billion) in one of the biggest acquisitions by a Chinese travel business of its overseas peer.
Skyscanner was reported last month to have put itself up for sale. The company was valued at US$1.6 billion in a funding round in January when it raised US$192 million from investors that included Malaysian sovereign wealth fund Khazanah Nasional Berhad and Yahoo Japan.
The takeover deal with Ctrip, mainly consisting of cash, is expected to be completed by the end of the year, with Skyscanner’s management remaining on board to operate the site independently under Crtip’s ownership, according to terms of the agreement.
The buyout comes as Nasdaq-listed Ctrip – considered to be one of China’s most acquisitive companies – has firmly cemented its position as the domestic travel industry’s dominant online player.
It bought its biggest rival Qunar last year and already holds key stakes in another two major competitors, Tuniu.com and eLong.
The latest deal, however, is Ctrip’s first billion-dollar takeover of an overseas peer, and comes at a time when free-spending Chinese tourists increasingly opt to travel farther afield, such as to the US and Europe for holidays. Ctrip’s shares declined 2.1 per cent to close at US$40.99 on Wednesday.
Last month, Ctrip announced strategic investments in three US-based tour operators for an undisclosed amount in a bid to provide better services to “Chinese people travelling in the US”, according to a company statement.
“Skyscanner is one of the biggest flight ticket search platforms in the world,” said James Jianzhang Liang, co-founder and executive chairman of Ctrip.
“This acquisition will strengthen long-term growth drivers for both companies. Skyscanner will complement our positioning on a global scale, and we will leverage our experience, technology and booking capabilities to help Skyscanner.”
Edinburgh-headquartered Skyscanner’s services are available in more than 30 languages. It has 10 offices in cities including Beijing, Barcelona, Singapore and Miami, employs 800 people, and has around 60 million monthly active users.
The company was created in 2003 to let users compare prices from different travel sites when searching for flights, hotels, and rental cars.
China’s outbound tourism boom continues unabated, despite the country’s economic slowdown and yuan depreciation. A record six million Chinese travelled abroad during the recent seven-day golden week holiday.
According to a study last year by travel services provider LY.com, nine out of 10 independent Chinese travellers would use an online travel site to book air fares and accommodation.
European entertainment and tourism companies have become the darlings of Chinese corporate giants looking to snap up overseas assets over the recent few years.
In April an offshoot of Chinese aviation and shipping conglomerate HNA Group said it planned to buy US-based Carlson-Rezidor Hotel Group, while Fosun International, owned by billionaire Guo Guangchang, bought French resort operator Club Méditerranée SA last year.
Ctrip reported on Wednesday a reversal in fortunes for the third quarter, following two quarters of losses, with its revenue surging 75 per cent from a year earlier to 5.6 billion yuan. However, analysts worried that a sluggish Chinese economy may eventually decelerate its rapid growth going forward.