The deal is predominantly cash and is expected to close before the end of this year. Once completed, Skyscanner will operate independently of Ctrip, both parties confirmed.
Ctrip was founded in 1999, and it is China’s largest online travel firm. Its revenue for Q3 2016, which was announced today, came in at RMB 5.6 billion ($810 million), that’s up 75 percent year-on-year, with a slim $4 million net profit. Ctrip recently raised close to $1 billion from the sale of convertible notes, a raise that looks to be coordinated with the Skyscanner deal.
This news comes less than a year after Skyscanner, which has over 700 staff across 10 offices, raised $192 million in funding in January 2016 to expand its reach worldwide. That was the company’s first financing in more than two years, and investors included Khazanah Nasional Berhad, the Malaysian government’s strategic investment fund, Yahoo Japan, fund manager Artemis, investment firm Baillie Gifford and PE firm Vitruvian Partners. Sequoia is an existing backer.
The round valued Skyscanner at a reported $1.6 billion. The company was widely-expected to pursue an IPO in 2017, which made its acquisition somewhat surprisingly while the price isn’t a huge leap on that previous valuation. Skyscanner had seen its revenue growth slow, as Skift reported, but the company put that down to increased investment in product rather than marketing.
Regardless, this is the largest travel tech acquisition in Europe to date. Skyscanner placed much emphasis on Asia — partnering with Yahoo Japan and acquiring China-based travel search startup Youbibi — but the deal promises to help Ctrip expand its business into international markets.
“Skyscanner will complement our positioning at a global scale and Ctrip will leverage our experience, technology and booking capabilities to Skyscanner’s,” Ctrip co-founder and executive chairman James Jianzhang Liang said in a statement.
In a video statement, Skycanner CEO and co-founder Gareth Williams said that the deal would enable his company to gain access to greater resources to make travel “simpler:”
It’s been a busy past year or so for Ctrip, which has pursued M&A activity to expand. More than a year has passed since it agreed to a share swap with arch rival Qunar, which saw it gain a 45 percent voting interest in Qunar in exchange for 25 percent of the Ctrip business.
In January of this year, Ctrip spent $180 million to buy around one-quarter of India’s MakeMyTrip, while it splurged $463 million this summer to get a slice of China Eastern Airlines, a state-run airline that claims 94 million passengers.