Expedia sells China partner eLong to Ctrip, Ctrip fails to acquire Qunar

Ctrip, China’s top travel site, this afternoon announced it has taken a US$400 million stake in long-time arch-rival eLong. The deal, which closed today, was done by acquiring eLong shares from Expedia. Ctrip now has a 37.6 percent stake in its erstwhile rival.

Expedia has sold off its entire 62.4 percent stake in eLong, worth US$671 million, by selling the remaining shares to three other buyers (Keystone Lodging Holdings, Plateno Group, and Luxuriant Holdings), the US-based company said today.

As a result of this deal, Ctrip says that it has agreed to cooperate with Expedia on “certain travel product offerings for specified geographic markets.”
Expedia’s brief statement did not make clear why it’s exiting eLong.


Battle won. War rumbles on

The huge Expedia sell-off marks a major sea-change in China’s highly competitive travel ecommerce sector. It seems to be a huge win for Ctrip, which has now tamed its closest competitor.

That leaves Ctrip freer to focus on newer and fast-growing rivals such as Baidu-owned Qunar, Tuniu, and LY.

Ctrip has US backing of its own in the form of Priceline, which owns about eight percent of the company.


Chinese travel site Qunar nabs $500M investment, refuses Ctrip’s acquisition offer

Qunar, one of China’s biggest travel booking sites, announced today it has secured a strategic round of funding worth US$500 million led by Silver Lake, a global tech investment firm. Silver Lake invested US$330 million, while the remaining US$170 million was contributed by a second unnamed investor. Qunar said in a statement it will use the money to expand its mobile presence, grow its business lines, and enhance its technology.

The company listed on the NASDAQ in November 2013, when it raised US$167 million. It hasn’t made a profit since the IPO.

Qunar doubled its revenues in the first quarter of 2015 compared to the same period last year for a total of US$108.3 million, according to the company’s first quarter earnings report released today. Revenues from mobile devices represented nearly 60 percent of that.

The company’s biggest source of revenue is flight bookings, followed by hotel reservations.


Ctrip merger still on the table

Last month, China’s largest online travel booking company, Ctrip, offered to acquire Qunar.

Qunar included its response in its earnings report to quell rumors:


‘”After careful consideration of such offer, we declined to pursue it in a letter response dated June 1, 2015. However, consistent with our policy to consider all potential strategic opportunities that may benefit our company and our shareholders, we remain open to engaging in further discussions with Ctrip as well as with other strategic players in our sector.”


Qunar is a portfolio company of Baidu, another giant that runs China’s most popular search engine. Both Baidu and Tencent, along with Alibaba, make up the trifecta of Chinese web titans that largely shape the course of the country’s internet.

Ctrip last month purchased a US$400 million stake in Elong, another popular flight and hotel booking service in China. Those shares were purchased from US-based Expedia, which sold its US$671 million majority stake in the company. Expedia’s biggest rival, Priceline, owns a 10 percent stake in Ctrip.

If Ctrip were to acquire Qunar, it will have absorbed all but the smallest contenders in China.


Update on June 3, 2015: Ctrip has publicly responded to Qunar’s rejection, saying it is no longer interested in pursuing an acquisition. While Qunar says it received an “unsolicited” offer from Ctrip, Ctrip claims it sent a confidential preliminary proposal after being approached by Qunar. Clearly, Ctrip isn’t pleased with how Qunar handled the situation.


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