Ctrip is anxious to expand globally and views the acquisition of Skyscanner as a means to expand Ctrip's international footprint in selling air tickets. Look for Skyscanner to increase its booking capabilities and to evolve beyond search under the Ctrip umbrella.
Skyscanner, which is also trying to build up its hotel metasearch business, had been rumored to be seeking to do an initial public offering but the acquisition by Ctrip, the second largest online travel agency in the world and the largest in China, obviously takes an IPO off the table. We reported earlier this year that Priceline Group took a look at buying the company late last year, before Skyscanner raised its latest round of funding which valued it at $1.6 billion.
Major investors in Skyscanner include Sequoia Capital, Yahoo Japan and Malaysian sovereign-wealth fund Khazanah Nasional Bhd.
Ctrip stated it was buying out the majority shareholder of Skyscanner and would offer to by the stake of the rest of the shareholders, as well.
Ctrip’s new CEO, Jane Jie Sun said the deal is slated to close before the end of 2016 so it wouldn’t have a material impact on Ctrip’s earnings this year.
Speaking during Ctrip’s third quarter earnings call Thursday morning in China, Sun said Skyscanner has strong top-line growth and is profitable with “healthy” EBITDA margins.
Sun added that the Skyscanner acquisition would strengthen Ctrip’s overseas air ticketing capabilities, and Ctrip’s global footprint. Skyscanner could provide the front end while Ctrip could provide backend booking technology to spur growth, Sun said.
Sun added that both Ctrip and Skyscanner management believe that Ctrip’s technology and booking capabilities can spur Skyscanner’s growth and help the metasearch company, which does three-quarters of its business selling flights, become a more comprehensive travel search provider. Sun said she’s confident that Skyscanner can maintain its double-digit top-line growth pace for years to come.
Former CEO James Jipanzhang Liang, who takes over as executive chairman, put the Skyscanner acquisition in the context of Ctrip’s international expansion through investments. He said Skyscanner, which attracts more than 60 million monthly active users and is available in some 30 languages, will improve Ctrip’s global scale and strengthen Ctrip’s position throughout the world.
Liang compared the Skyscanner acquisition with Ctrip’s recent acquisitions in U.S. tour operators servicing Chinese travelers, saying they were all part of Ctrip’s strategy to expand through international investments.
Liang said he believes travel will become a much larger share of the Chinese economy as it has so much room to grow. For example, he said the number of flights per capita in China is 0.3 percent, which is only one-tenth of that in the U.S. where it is about 3 percent per capita.
Giving more Chinese the opportunity to travel will spur improvements in Chinese society, Liang said.
“China society will become much more vibrant and innovative” if more Chinese get the opportunity to travel, he said.
Asked about Ctrip’s mergers and acquisition strategy, CEO Sun said the company looks to acquire travel-related businesses, the first and/or second-place leaders in each vertical, and ensures that the valuation of the company to be acquired is reasonable.
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Photo credit: Skyscanner CEO Garett Williams. The metasearch site is being acquired by Ctrip. VisMedia / VisMedia