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Two online travel agencies, Qunar.com of Baidu and Ctrip.com International, Ltd., are discussing a possible merger, Bloomberg News reported on Tuesday, quoting informed sources. The two companies are said to be discussing to enter into either a partnership or a total merger. Their talks are at an early stage and have not tackled ownership structure nor a financing scheme, according to the sources. "It makes sense for Ctrip to partner with Baidu because Chinese travel sites still rely heavily on search engines for traffic volume," said Alex Wang, an analyst at IResearch, a Shanghai-based consultancy firm. "Travel is a very important component of Baidu's advertising revenue, and working with Ctrip could help it better monetize this sector," Wang added. The merged entity could reach a value of at least US$10 billion because Qunar and Ctrip focus on different market segments, according to Wang. Shares of Baidu, traded in New York, rose 5.2 percent to close at US$150.96 per share on Tuesday, while shares of Qunar, traded in Nasdaq, gained 14.65%, closing at US$30.84 per share and creating a new high. Shares of Ctrip also went up 10.41%, closing at US$55.48 per share. According to IResearch's data, China's online travel market is expected to reach RMB 465 billion (US $75 billion) by 2017 as China's middle class are spending more on leisure and entertainment. Ctrip's current market value is US$7 billion, and Qunar's market value is US$3 billion. Some analyst believes that Baidu thinks highly of Ctrip due to its rich and excellent online travel services and connections, which other online travel agencies could not compare with. China's three giant internet companies, Baidu, Alibaba, and Tencent, have all invested on online travel agencies. Tencent has investents on eLong.com; Baidu on Qunar.com, and Alibaba on ByeCity.com. Baidu will be the largest among the online travel agencies if the Qunar-Ctrip merger materializes. |
