Ctrip acquired eLong behind

Text / Hou Jiyong

Earlier Seekingalpha website broke the news, said Ctrip plans to acquire the United States online travel company Expedia held a 65% stake in eLong. Informed sources said the case also implies another possibility - the acquisition of eLong by Alibaba.

According to informed sources, Ctrip plans to exchange shares through the exchange transaction to acquire the shares of eLong, the deal on eLong's valuation will be 800 million to 1 billion US dollars between. At present, both sides of Ctrip eLong do not comment.

In the past six months, Alibaba's M & A transactions involved the Internet, IT, cultural media, logistics and other industries. It has disclosed a turnover of up to 26.8 billion yuan, while online travel has always been one of its focuses.

Ctrip's institutional shareholders include Oppenheimer Systems, holding 4.63 million shares of 13.72%, T.RowePrice holding 4.4 million shares of 13.13%, BaillieGifford holding 1.82 million shares of 5.41%. After the acquisition of eLong by Ctrip, Expedia will become a major shareholder in the new company and may even surpass the largest shareholder, the Oppenheimer System.

Expedia's market capitalization of up to 10.673 billion US dollars, its purpose is to allow Chinese companies to use their overseas inventory. To do this better, Expedia will largely be interested in privatizing the takeover company.

Privatization of listed companies is a special type of M & A operation in the capital market. Ordinarily, the controlling shareholder buys all the shares in the hands of the minority shareholders, expands the existing shares, and finally delists the company.

This is not a good incident for Ctrip management, led by Liang Jianzhang, who want long-term control of the company.

In April this year, Baidu's Ctrip deal was close to completion. According to Baidu's then plan, after the merger Ctrip will be merged with where the net. However, this good thing did not end up being a reality, not least because of the integration that led to a war of scrambling for seats. Where to network CEO Zhuang Chen Chao and Ctrip CEO Liang Jianzhang who will be the new company CEO, it is difficult to reach a consensus.

In addition to the seat issues, if Ctrip shares acquisition eLong law there are legal issues. Ctrip, eLong in the domestic online hotel sector share far exceeds 50%, if the joint, either Ctrip Holdings or just a small investment in shares, will in essence form a "monopoly alliance," thus undermining healthy competition in the market. Other competition may take legal measures to stop the merger.

Chen Shou-hsu, an Internet expert, pointed out that "Chinese companies should look forward to long-term things, and if Ctrip chooses to cooperate with expedia, it will surely be scrutinized because of domestic monopolies and faces the problem of giving up maritime rights."

The above-mentioned industry sources said: Alibaba acquisition eLong, neither to seize the seat, there is no monopoly. The acquisition of eLong, Ali is necessary for the equipment added: Tourism has always been Ali's important direction of development.

As early as May 2010, Alibaba launched Taobao Travel Platform. In January 2013, Alibaba Group integrated its tourism business to set up the Air Travel Division. In May, it announced strategic investment travel records and application sharing on the road. July 1 Amoy network into the vertical search tourism; the same month, Ali Group announced the acquisition of Chinese travel information and online value-added service providers poor travel network. It is said that Alibaba will also invest 15 million US dollars in strategic travel Bai-distance travel network.

Chen Shou-ching said: "Ctrip merger with eLong is not suitable.In reality, Chinese law and regulators also do tend to two or more domestic VIE merger Alibaba M & A and the successful acquisition of micro-Bo is an example. "