Baidu Inc.—the majority shareholder of Qunar Cayman Island Ltd—agreed to swap shares worth nearly $5.9 billion with Ctrip.com International Ltd in exchange for a 25 percent stake in Ctrip.com. At the completion of the deal that was revealed on Monday, Ctrip will hold a 45 percent voting interest in Qunar, and Qunar and Ctrip will cooperate in various products and services in the future.
Qunar, an online and mobile travel platform similar to KAYAK, provides search results for airline tickets, hotels, and group-buying deals. Ctrip.com (similar to Expedia, Inc.) is the leading online travel agency in China, providing hotel reservations, transportation tickets, and corporate travel management. A Qunar-Ctrip partnership will control 70 to 80 percent of hotel and airline markets in China, according to Summit Research. The deal came after Qunar’s rejection of Ctrip buyout offer in June 2015.
Chinese online travel agencies faced shrinking profit margins due to price competition that relied heavily on subsidizes. The partnership follows the Meituan-Dianping deal, and the creation of Didi Kuaidi Joint Co, keeping with the trend of Chinese tech companies cooperating to cut the cost of competition.