Chinese travel firm Utour plans to acquire travel agency Huayuan for RMB 2.6 billion (USD 398 million) with cash and stock shares, said a statement by Utour on Monday. Ctrip, Huayuan’s original shareholder, will hold 5.07% of Utour’s shares after the transaction.
Utour and Huayuan will both benefit from the acquisition in terms of product design, tourism resource development and gaining new customers, according to the statement.
The acquisition will help Utour secure its position as a market leader, increase its market share in the outbound travel market and create more outbound travel products.
Huayuan’s businesses include outbound travel, MICE travel, and luxury travel. In 2015, the company’s main business revenue totaled RMB 2.42 billion, a year-over-year increase of 275.82%, and its net profit reached RMB 37.5 million. Utour says Huayuan’s net profit will be at least RMB 106 million in 2016, and total net profit from 2016 to 2018 will reach at least RMB 427 million.
Founded in 1992 with headquarters in Beijing, Utour was listed in Shenzhen in 2014. The company has completed more than ten acquisitions in sectors including tourism, big data and sports since 2014. It has also invested in small online travel players including Qyer.com and Yaochufa.com to increase its influence in the tourism industry. The firm had 50 branches in China as of September. Utour’s net profit for the first three quarters of 2015 reached RMB 171 million, representing a YoY growth of 82.88%.
Utour is also expanding its businesses by tying the knot with Chinese online travel giant Ctrip through this acquisition. As part of the agreement, Utour will pay Huayuan’s original stakeholders with Utour stocks. According to Chinese newspaper Beijing Business Today, Ctrip owned 38.07% of Huayuan before this acquisition.
Utour and Ctrip will cooperate on the development, sourcing, and distribution of outbound travel products, said the agreement framework they signed in February.
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