Where are you going? China's largest online tourism service Ctrip launches merger negotiations

Absrtact: April 24, Bloomberg reported earlier this month that Baidu's tourism website is going to China's largest online travel service Ctrip to start a merger talks. Barclays analyst Alicia Yap and Anand Ramachandran released a study on the issue

On the April 24 news, Bloomberg reported earlier this month that Baidu's travel website is going to the Ctrip of China's largest online tourism service.

Alicia Yap and Anand Ramachandran, a Barclays bank analyst, reported that the merger of the two companies would create synergies, but the deal was unlikely to happen. The report pointed out that if two companies to merge, then Ctrip will be available from the Baidu search engine free flow, and the use of Baidu's various location-based services, such as Baidu map, etc.:

"If you can become a part of Baidu, then Ctrip will be able to obtain from the Baidu search business free flow, which helps to reduce the ctrip of PC-side and mobile end users to obtain costs." As Ctrip is increasingly focusing on the development of local/regional ticketing and car rental services, it will help Ctrip to provide improved mobile booking services to its users if combined with the Baidu area and other location-based functions. ”

At the same time, Baidu can become a leader in the vertical tourism industry by going to a merger with Ctrip, and this vertical industry is strategically important:

"Where to go is planning to invest more money to expand its service/product portfolio, and if there is a merger with Ctrip, then Baidu and where to go will save a portion of the new investment budget." Baidu is actively developing maps and other geographic services based on its mobile commercialization strategy, while Ctrip's online travel service offerings will help Baidu increase its O2O (offline to online) commercialization capabilities and boost its use of mobile payment services.

For Baidu, if you can have both Ctrip and where to go, then you can easily maintain the leading position in the tourism vertical industry, and its face from other large internet companies will be less competitive threat. In particular, it should be pointed out that Baidu search business search query requests and revenue are to a large extent related to tourism needs. ”

But these analysts at Barclays also pointed out in the report that there is little likelihood of a ctrip merger in the near future:

"Another press report of April 15, 2014 provided Ctrip and where to go the internal e-mails sent by CEOs to employees of their respective companies, which show that all two companies have ambitions to be leaders in the tourism industry." In our view, such a position suggests that the two sides are unlikely to merge in the near future. ”