dimanche 9 août 2015

Travel industry in China

Travel industry in China 

Ctrip is likely to make a counter-bid for eLong following a surprise offer from Tencent, sparking a potential bidding war that should ultimately see Ctrip emerge as the victor.

I also have to suspect that this particular bid came without the knowledge of Ctrip, which itself owns 37 percent of eLong. Ctrip got its stake after joining a group that bought out a controlling 62 percent of eLong previously held by US travel giant Expedia (Nasdaq: EXPE) earlier this year. 
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.
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 announcementChinese 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.

source http://www.youngchinabiz.com/en/travel-bidding-war-coming-for-elong-with-tencent-offer/

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