OTA investors push Ctrip where to merge

Absrtact: If the integration of Ctrip and Baidu's online tourism platform will become one of the most important transactions in China's online tourism industry, it will also change the competition map of the market, which is also significant for investors in two companies. People familiar with the matter revealed to Tencent Technology

If the integration of Ctrip and Baidu's online tourism platform will become one of the most important transactions in China's online tourism industry, it will also change the market's competitive landscape, which is also significant for investors in two companies.

People familiar with the matter told Tencent that the high jianling capital of well-known investment institutions as Ctrip and where to go to two of the shareholders of the company, is an important catalyst for negotiations between the two sides.

According to the data, high jianling capital currently holds Ctrip and where to go in the stock as an institutional shareholder. By the end of 2013, high Jianling Capital held 2.62% of the Ctrip stock; and where to go the net in the last March, without the lack of funds to accept Gao 57 million dollars, to go to the listing when the high jianling capital holding its 14.0615 million common shares.

Gao Capital is one of China's largest hedge and investment funds, management of assets over 8 billion dollars, it is noteworthy that Gao adhere to the value of investment concept, that is, the bullish unlisted or listed enterprises to focus on investment and long-term shareholding, which also means that the high jianling will be more at the strategic level to enhance the market position of capital operations.

Where are you going? CEO Zhungchengsu said in an interview with Tencent Technology on the eve of the IPO last year that the introduction of high jianling capital investment was more about seeking strategic help and guidance.

With the release of the increasing consumption potential of the middle class, China's online tourism industry has entered a rapid development stage in recent years. It is predicted that from 2012 to 2015, China's tourism market will achieve double growth, to reach 30 billion dollars.

At present, China's online tourism penetration rate is only 15%, far lower than developed countries. Last year, China became the largest market for outbound tourists in the world by nearly 100 million people, which became one of the new engines of online tourism.

Tencent, Baidu, Alibaba and other giants are strengthening the online tourism market layout and integration. At present, Tencent has invested in tourism web site Art Dragon and the same way network, Alibaba has its own Taobao travel, and investment in poor travel, on the road and other start-up companies.

Online travel site has an urgent demand for traffic, which is Tencent and Baidu, such as the advantages of giants. Analysts pointed out that if Baidu finally successful will carry Ctrip and where to merge, will be able to play its flow advantage and scale effect, become the online tourism industry leader.

But this is bound to further aggravate the integration of the online tourism industry. Tencent Investment in the art of the Dragon and the same process recently reached a strategic business cooperation.

Baidu and Ctrip deal highly complex

For the Baidu holding Ctrip, Ctrip's high market capitalisation, the highly dispersed shareholding and Ctrip in 2007 launched the "Equity diluted anti-takeover measures" (poison pill Plan) to make this merger difficult to increase greatly.

As of February 28, 2014, Ctrip's top three institutional shareholders were OppenheimerFunds, Inc. (shareholding 13.72%), T Rowe Price Associates, Inc. (13.13%) and Baillie Gifford & Co. (5.41%), total shareholding 32.26%.

As Tencent Technology previously pointed out, Ctrip's shareholding structure is highly dispersed, theoretically, the diversification of shares may increase the risk of ctrip, but the diversification of equity is a double-edged sword, because if the acquirer to operate, it is necessary to buy shares from different agencies, the negotiations are quite complex.

One investor told Tencent that the big institutional shareholders of Ctrip were temporarily reluctant to quit unless the acquirer offered a premium that was high enough.

and Ctrip prior to the implementation of the "equity diluted anti-takeover measures" (Poison pill Program) in theory to prevent the possibility of third-party compulsory acquisition.

Tencent Technology found that in November 2007, Ctrip announced that the company's board of directors had approved a shareholder equity plan designed to protect the best interests of Ctrip and its shareholders. The plan reads: After the U.S. stock market closed on December 3, Ctrip shares will be divided into a share of shareholder rights per share. At the initial stage, shareholder rights will be attached to the certificate representing common stock without the issuance of the certificate of entitlement. Only when a person or group obtains 20% or more of the Ctrip voting stock, including the acquisition of US depository receipts representing common stock, can the shareholder rights be exercised and the line price is 700 USD for each purchase of Ctrip common shares.

Simply explained, after 10 days after the purchase by a person or team of a right to buy Ctrip 20% or above, or after 10 working days after the commencement or intentional purchase of an offer or exchange to obtain 20% or more voting shares, In addition to the potential acquisition of nowhere all rights holders can buy the company's common stock at a discounted price, the potential buyer will pay 700 dollars per share price to buy new shares.

According to Tencent Science and technology, the plan is still valid.

On the control of Liang Jianzhang and Zhungchengsu

The above analysis means that Baidu if holding Ctrip, the premise is and Ctrip board, management and major shareholders reached a consensus. And where and where to integrate, Ctrip for their own interests may put forward the demand for the dominant.

Strictly speaking, Ctrip management currently has less control over the company. No public information shows the current shareholding of Ctrip, but according to 2007 data, founder Liang Jianzhang's shareholding is 1.5% (prior to listing held 8.6% shares), CEO fan about 0.8% (and then independently buy Ctrip stock), there is news that Ctrip CFO Sun is now holding 2.2%, Fan shares 2.9%.

In addition, as of December 31, 2013, Ctrip held 3,777,087 common stock stocks, about 12% of the current market share. Ctrip recently announced that the board had passed a 600 million dollar share repurchase plan, which allowed Ctrip to rise to about 22% per cent of its total shareholding.

If Baidu finally completed the holding of Ctrip, Ctrip and where the integration is unavoidable, this will be a big problem.

An investment banker told Tencent technology that, although Liang Jianzhang had the support of Ctrip and the board, he wanted to devote himself to research on the social issues of the population, not much enthusiastic about the online tourism industry, and secretly sought his successor at the end of last year.

Even if Zhungchengsu want to take the merger of Ctrip to take the new CEO, also need difficult negotiations to get Ctrip board and management approval.

And for where to go CEO Zhungchengsu, before also revealed to the investment industry interest, in the personal investment beauty said, Rong 360, in 2012 and high jianling Capital and other entrepreneurs jointly set up a clean capital, and pull friends former Baidu vice President Wang Mengqiu as managing director.

At present, where Zhungchengsu shareholding to go to 7.23%, in addition, Baidu shareholding to where 62%, other institutional shareholders include Jinsha venture, Lehman Brothers, Mayfield, GGV Capital and other companies.

It is noteworthy that after the listing of six months, where to go top and investment institutions in May will usher in the ban on restricted stocks.