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Overseas Chinese Town (OCT)(Asia), a Shenzhen-based company engaged in the development and operation of commercial properties, announced its plans to venture into the online travel space on May 10. According to the announcement, Huachang International, a wholly-owned subsidiary of OCT (Asia), plans to acquire a 5.11% stake of Suzhou Wancheng with about RMB 1.176 billion. The real target of this investment is speculated to be Tongcheng-eLong. As of the date of the equity transfer agreement, Suzhou Wancheng is the sole shareholder of a British Virgin Islands subsidiary, which holds a 13.04% stake in the yet unnamed target of OCT’s acquisition. The BVI subsidiary will transfer the stake to Suzhou Wancheng, and the latter will then sell the stake onto Huachang International in the round-about deal. OCT only revealed in its announcement that the target of its acquisition is a leading online travel agency in China that provides one-stop travel booking services with robust growth prospects, and that the acquisition target has achieved RMB 1.227 billion in net profit after tax in 2016, and reported net loss after tax of RMB 594 million in 2017. It was said in the announcement that the target of the acquisition is delivering strong performance driven by rising daily active users and transaction volumes, as the industry has seen explosive growth over the recent years. Suzhou Wancheng is short for Suzhou Wancheng Shengda Tourism Development, based at the Suzhou Tongcheng Travel Building, and its only shareholder is Beijing Wanda Cultural Industry Group. The description of the target company of the acquisition in the announcement leads to speculations that the target company is Tongcheng-eLong. ChinaTravelNews has also learned from insiders that Tongcheng-eLong will announce major news soon. However, the speculation has yet to be confirmed. An insider confirmed that Tongcheng-eLong is the target of the OCT acquisition, and believed the announcement would be about OCT (Asia) buying a 5.11% stake in Tongcheng-eLong for RMB 1.176 billion. “It is likely that Wanda is selling part of the stake in Tongcheng-eLong to OCT (Asia) at an overall valuation of RMB 23 billion,” the insider suggested. |
