Bottom line: Ctrip’s massive new bond and share offer could raise up to $2.2 billion, and portends a major offshore acquisition in the next 6 months.
Ctrip in $2.2 bln cash raising plan
Online travel agent Ctrip(Nasdaq: CTRP) has just announced a complex plan to raise up to $2.2 billion in cash, in one of the biggest fund-raising exercises I’ve seen by a Chinese Internet company. The huge sum, combined with Ctrip’s existing large cash reserves, raises the obvious question of what this fast-growing company might be planning to do with all that money. One obvious answer is that Ctrip is planning a major offshore acquisition, reflecting its new global aspirations after quietly eliminating most of its local competition to dominate the lucrative China market. Read Full Post…
Bottom line: Ctrip’s new alliance with China Eastern continues its strategy of using equity tie-ups to further cement its position as China’s dominant provider of travel products and services.
Ctrip ties with China Eastern
In what looks like a first for private sector Chinese companies, leading online travel agent Ctrip (Nasdaq: CTRP) has just announced it will invest 3 billion yuan ($460 million) in China Eastern (HKEx: 670; Shanghai: 600115; NYSE: CEA) as part of a new strategic tie up with one of the nation’s top 3 airlines. The deal comes less than a year after US giant Delta Air Lines (NYSE: DAL) invested a similar amount in the Chinese carrier, and provides an important ally for Ctrip with one of its major suppliers.
This deal also comes as Ctrip’s former foe and new ally Qunar (Nasdaq: QUNR) remains locked in its own battle with China’s major airlines in a separate dispute tied to unruly third-party travel agents on its open platform. (previous post) Unlike Ctrip, which sells most of its plane tickets directly to travelers, Qunar’s open platform is home to hundreds of third-party travel agents who are harder to control and sometimes engage in deceptive practices when selling their products and services. As a result, many airlines have recently stopped allowing the sale of their tickets on Qunar’s website. Read Full Post…
Bottom line: Ctrip’s recent series of equity tie-ups, including a new rumored deal with Tuniu, could prompt the anti-monopoly regulator to take action to preserve competition in China’s online travel market.
Ctrip eyes new travel tie-up with Tuniu
A strong earnings report from online travel titan Ctrip (Nasdaq: CTRP) and word of a potential new business alliance with a major rival has ignited the company’s shares, which soared 14 percent after it released its latest financials. Ctrip has become a master at the strategic tie-up, buying stakes in most of its rivals over the last 2 years without actually acquiring any of them.
That strategy seems designed to make sure its rivals act more friendly and aren’t competitors, which will help support its profits by reducing the constant price wars that have plagued the industry for much of the last 2 years. The only problem is that such actions have distinctively anti-competitive overtones, and could well draw the attention of China’s anti-monopoly regulator. Read Full Post…
Bottom line: New fund raising by Ctrip and Tujia looks like far more than either company needs, and is part of a broader wave seeing Chinese Internet sites raise big funds to take advantage of strong investor sentiment.
Tujia raises $250 mln
Someone recently asked me why so many companies in China are currently rushing to raise cash, and, after some quick thought, I provided my best answer: Because they can. That seems to be the mentality among Chinese companies these days, including leading online travel agent Ctrip (Nasdaq: CTRP), which has just issued bonds to raise a cool $1.1 billion in new cash that it really doesn’t need. But that statement isn’t completely true, as Ctrip is in another headline that has it joining in a new $250 million funding round for Tujia, China’s equivalent of Airbnb. Read Full Post…
Bottom line: Qunar’s latest quarterly results show it will continue to spend aggressively and post big losses as it competes with Ctrip, and reflect the fact that its biggest asset is its majority ownership by the cash-rich Baidu.
Qunar spurns Ctrip, raising cash
China’s highly competitive online travel landscape is rapidly shaping up as a two-horse race, with one group centered on industry leader Ctrip (Nasdaq: CTRP) and the other on up-and-comer Qunar (Nasdaq: QUNR), which is controlled by leading search engine Baidu (Nasdaq: BIDU). After Ctrip announced a flurry of major new tie-ups last week, Qunar is fighting back with new fund-raising announcements that include a nearly $1 billion cash injection through the issue of new stock and bonds.
Qunar announced the fund-raising the same day that it released its latest quarterly results, which contained the surprise disclosure that it was approached by Ctrip last month about a merger. It added that it rebuffed the advance, but it clearly needs new funds as its own cash pile remains relatively small and its losses balloon due to aggressive spending. Read Full Post…
Bottom line: Priceline’s new China foray with Ctrip will get off to a positive start, but will run into problems and ultimately collapse due both sides’ inability to gain much from the partnership.
Ctrip boosts Priceline alliance
Just days after global online travel giant Expedia (Nasdaq: EXPE) announced its withdrawal from China, rival Priceline (Nasdaq: PCLN) is moving in the other direction with a significant boost to its partnership with local sector leader Ctrip (Nasdaq: CTRP). I’ve previously been quite skeptical of this particular partnership, after previous similar tie-ups failed due to the fiercely independent nature of Ctrip’s top management. I’m still quite skeptical, though a string of other major tie-ups by Ctrip recently seem to show it’s realizing it needs to be more flexible to fend off the growing threat from fast-rising local rival Qunar (Nasdaq: QUNR). Read Full Post…
Bottom line: Thursday’s hacking attack on Ctrip brings a sour end to its week of major new tie-ups, but isn’t too unexpected for a company of its size and should have a relatively limited impact on its operations and reputation.
Ctrip shut down by hackers
I’ve been writing a lot about leading online travel agent Ctrip (Nasdaq: CTRP) these last few days after it signed a couple of major deals, so it seems fitting that we end the week with news of a major hacking attack that took the company offline for most of Thursday. I’m a longtime user of Ctrip and am generally a big fan of the company, whose good management and focus on its core travel business have allowed it to maintain its market-leading position for a decade despite numerous challenges.
Against that backdrop, this hacker attack seems like a relatively minor issue, though one that could be potentially worrisome as it exposes one of Ctrip’s biggest vulnerabilities. Then again, Ctrip is certainly not the only company to come under such attacks, and many much larger and more experienced western giants like US retailer Target (NYSE: TGT) and Hollywood studio Sony Pictures (Tokyo: 6753) came under much higher-profile and more damaging outside assaults last year. Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 27. To view a full article or story, click on the link next to the headline.
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LeTV (Shenzhen: 300104) to Raise 7.5 Bln Yuan Through Private Placement (English article)
Bottom line: Ctrip’s purchase of a controlling but minority stake in eLong is the latest in a string of similar equity tie-ups by the company, none of which looks very exciting because these new partners aren’t interested in working closely with Ctrip.
Expedia sells eLong stake
A longtime but largely empty cross-border Internet partnership has finally come to an end, with word that US online travel agent Expedia (Nasdaq: EXPE) has dumped its stake in Chinese laggard eLong (Nasdaq: LONG). In an interesting twist to the story, the group buying eLong includes Chinese industry leader Ctrip (Nasdaq: CTRP), which seems to be buying small stakes in many of its rivals these days without buying anyone outright.
Personally speaking, I don’t see much reason to get excited about Ctrip’s latest buy, even though investors seemed to think differently. eLong is a perfect example of a company that had huge advantages due to its early arrival to the online travel market and longtime partnership with Expedia. And yet it failed to parlay any of that into a market leading position, and instead has become an afterthought as it got overtaken by younger, more innovative companies like Tuniu (Nasdaq: TOUR) and Qunar (Nasdaq: QUNR). Read Full Post…
Bottom line: Ctrip’s latest M&A reflects the growing scarcity of good acquisition targets for cash-rich Chinese Internet firms, which could pressure them to issue dividends or launch share buy-backs.
Ctrip makes UK acquisition
A new overseas purchase by leading online travel agent Ctrip (Nasdaq: CTRP) is drawing yawns from investors, reflecting the very real fact that Chinese Internet firms have far too much cash in their coffers and no place to spend it. This particular dilemma is one that most western companies would love to have, since excess cash can be used for not only M&A and organic expansion, but also to pay dividends or buy back shares. But in the case of Chinese companies, a big chunk of the cash has been raised in a series of massive bond and share offerings over the last 2 years, meaning it would be strange to turn around and return the money to investors through a dividend or share repurchase. Read Full Post…
I’m normally quite upbeat on leading online travel site Ctrip (Nasdaq: CTRP), but I really don’t understand the logic behind its new decision to sell 10 percent of itself to US peer Priceline (Nasdaq: PCLN). On the surface, the deal looks reasonable enough, pairing Ctrip’s strength in China with Priceline’s in the US and other western markets. But anyone familiar with Ctrip knows the company is fiercely independent and doesn’t work very well with other strategic partners. What’s more, this deal will put even more money into Ctrip’s already bulging cash pot, giving it more funds than it needs.
