Baidu-backed Ctrip to consolidate leadership with spending spree as China’s online travel industry sees 2016 as being full of smiles
As China’s outbound tourism boom to Thailand, Europe and other destinations continues, Ctrip plans investments in rival Qunar, other firms after recently snapping up a 26.6 per cent stake in India’s MakeMy Trip
China’s online travel industry could be revving up for a banner year as Ctrip.com International, which is backed by internet search giant Baidu, consolidates its domestic market leadership with new investments totalling an estimated US$3.2 billion.
Nasdaq-listed Ctrip, the country’s largest digital travel services provider, said it has agreed to make certain investments in several enterprises outside the United States which are focused on investing in businesses on the mainland, according to a regulatory filing after the US market closed on Tuesday.
The company said its planned investments will be “in the form of limited partnership capital contribution or other financing arrangements”, involving US$1.3 billion in cash and the issuance of about 5.4 million ordinary shares to these unidentified non-US entities.
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Alicia Yap, the head of China internet research at Barclays, said in a report that the value of those shares would reach about US$1.9 billion, based on Ctrip’s closing price of US$44.59 per share on January 12.
Ctrip, which is headquartered in Shanghai, said the targeted investment entities will also acquire “a significant minority stake” in Qunar, its affiliated Nasdaq-traded online travel platform, from shareholders through privately negotiated deals.
The proposed new investments have come roughly a week after Ctrip announced its purchase of a 26.6 per cent stake in MakeMyTrip, India’s biggest online travel agency, through US$180 million in convertible bonds.