China’s two largest travel booking giants Qunar and Ctrip are partnering up to end a long period of rivalry and courtship with a share swap and business alliance.
The deal follows two major mergers between competing tech companies in China this year (taxi app firms Didi Dache-Didi Kuaidi, and Yelp-like rivals Dianping-Meituan), although Qunar and Ctrip are entering into a partnership not merging. Bloomberg reported that the two companies have a combined valued of $15.6 billion, so this is a major piece of consolidation nonetheless.
When Qunar raised $500 million in fresh funding back in June it revealed that it had declined an acquisition offer from Ctrip. A statement at the time said it “remain[ed] open to engaging in further discussions with Ctrip as well as other strategic players in our sector” — said negotiations have now borne fruit after Baidu, the majority investor that made ripples when it backed Qunar back in 2011, agreed to give Ctrip a 45 percent voting interest in Qunar in exchange for 25 percent of Ctrip.
Beyond mixing their ownership, the companies said they would work together “across a broad base of products and services.” Baidu said its existing relationship with Qunar — which it sees it use hotel and flight bookings for its Nuomi, maps and mobile search services — would continue, and it seems likely the tech firm will begin cooperating with Ctrip too, now that it is a shareholder.
“We are excited by this transaction, which we believe will help build a healthy travel ecosystem in China. 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.
“China travel is an industry with great potential. As the technology leading player in the industry, Qunar has become China’s fourth largest e-commerce company with tremendous growth momentum,” commented CC Zhuang, CEO and co-founder of Qunar.
It isn’t clear what changed since the summer offer from Ctrip. Details of the offer were never disclosed, so it could have fallen short of what Qunar expected, but an interesting shift has been the influence within the company’s management. Baidu never held a boardroom majority, despite being majority owner of Qunar, but three new appointments to the board in September gave it greater influence and may have contributed to the share swap agreement.
Unlike some of the previous merger deals, competition wasn’t weighing down on either companies and neither was burning capital at crazy rates. This alliance looks to have plenty of positive synergy, particularly as tourism inside China grows while the country is tipped to become the second larger supplier of global tourists. Certainly, with Ctrip also invested in travel booking firm Tuniu and online travel agency LY.com, it is sitting pretty.