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Ctrip.com International Ltd. and Qunar Cayman Islands Ltd. surged in U.S. trading after the companies agreed to a share swap and partnership that creates China’s biggest online travel service, seeking to tap a record number of travelers heading overseas.
Ctrip rallied 24 percent to a record $92 at 9:39 a.m. in New York. Qunar jumped 12 percent to $44.08, the highest since Aug. 10. Goldman Sachs Group Inc. upgraded both companies to buy.
Baidu Inc., which controls Qunar, will own 25 percent of Ctrip, and the companies will combine products and services, according to a statement released Monday. Ctrip will have a 45 percent voting interest in Qunar. The exchange ratio represents a 36 percent premium to Qunar’s closing price on Friday, valuing the company at $7 billion.
“You’re seeing the bigger players getting bigger,” Brendan Ahern, managing director at Krane Fund Advisors LLC in New York who invests in Chinese Internet companies, said by phone on Monday. “There seems to be more and more impetus for the boutique and niche players to be affiliated with one of the big companies, Baidu, Alibaba and Tencent. You would have thought maybe Alibaba would have made a play for Ctrip, since Baidu had Qunar. So maybe it was, the best defense is a good offense.”
This article was written by Taylor Hall from Bloomberg and was legally licensed through the NewsCred publisher network.