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China’s travel service giant Ctrip purchased 45% of Qunar’s shares from Baidu

Rhea Liu

China’s largest online tourism platform Ctrip, will become rival travel website Qunar’s biggest shareholder (non-controlling) with 45% of its shares.

Ctrip acquired Qunar’s stakes from Baidu, the previous primary shareholder of Qunar, with 25% of Ctrip’s own shares.According to Ctrip’s announcement, the newly combined Ctrip-Qunar will be valued at USD 15.6 billion, based on Bloomberg.

According to an internal email by Qunar CEO, Zhuang Chenchao, Qunar will remain independent after the transaction and will negotiate with Ctrip about any future collaboration/competition scheme and choice of a primary focus in the market.

Zhuang also announced that as part of Qunar’s incentive plan, it will lift most of the conditions of its staff’s incentives plan. All current employees can exchange their options in Qunar to Ctrip’s options at a ratio of 1:0.725.

“This milestone transaction will enable us to focus on providing the best travel products and services to our travelers,” James Liang, chairman of the board and CEO of Ctrip said in a statement.

Ctrip and Qunar have held several rounds of negotiations concerning a potential merger and acquisition in the past year. Qunar announced earlier this year it received a takeover offer from Ctrip in May but was reported to have rejected the offer on June 1st. Instead, Ctrip acquired the third largest OTA business platform in China, Yilong, on May 22nd.

Priceline, one of the biggest online tourism platforms, has purchased multiple rounds of Ctrip shares over the past month increasing its total shares to 12.63%.

It has become a trend for large Chinese O2O sites to merge in an attempt to dominate their target markets. Chinese Groupon-like site Meituan and Dianping merged in early October, and Chinese classifieds portals 58 and Ganji merged earlier this year. The Internet giants of China Baidu, Alibaba and Tencent commonly implicated in such deals. These mergers will further shape the O2O sector, leaving smaller-scale firms even less of a chance to survive in the market.

(Edited by Rohan Malhotra)

Graphics created by Long Binghua. All rights reserved.

(Top photo from Tencent)

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