Travel industry in China
Tencent has owned its stake in eLong since 2011. Ctrip’s recent moves have all pointed to its own buyout offer for eLong, leading me to believe that we could quickly see a bidding war break out for the company.I’ve been predicting for the last few months that leading online travel site Ctrip (Nasdaq: CTRP) would make a buyout bid for former rival eLong (Nasdaq: LONG), so I was quite surprised to read that such a bid has come instead from Internet giant Tencent (HKEx: 700). This particular move is all the stranger because Tencent hasn’t shown much interest in the travel sector before now, though it previously invested in eLong and now owns about 15 percent of the company.
More broadly speaking, this latest buyout offer is part of a bigger wave of similar deals that have seen dozens of US-listed Chinese companies launch privatization bids this year. Most of those companies have failed to attract interest from US investors, and their shares have languished as a result. Many feel they could get better valuations in China, and are trying to de-list from the US and eventually re-list at home.source http://www.youngchinabiz.com/en/travel-bidding-war-coming-for-elong-with-tencent-offer/
The case with eLong is similar, since the stock never did very well and has lost nearly half of its value since the Ctrip-led buyout of Expedia’s stake back in May. According to eLong, Tencent has now offered to buy all of its shares for $18 each, representing a 27 premium over their last closing price. (company announcement; Chinese article) But that price still represents a discount from the peak of more than $22 that eLong reached back in May when the earlier Expedia buyout was announced.