Purchase is part of broader internationalization strategy
Domestic leading travel service provider Ctrip.com International announced on Wednesday (U.S. time) plans to buy travel search platform Skyscanner Holdings for approximately 1.4 billion pounds (.74 billion) to boost its goal of establishing an international travel ecosystem.
Ctrip has signed a definitive agreement with the majority shareholders of Skyscanner, under which the company will acquire all of their shares. It will make a general offer for the remaining shares, Ctrip said in a statement sent to the Global Times on Thursday.
The purchase mainly consists of cash, the remainder consisting of Ctrip ordinary shares and loan notes.
The deal is expected to close by the end of 2016. After the acquisition, Skyscanner's current management team will continue to run the company's operations independently as part of the Ctrip group.
Skyscanner is a global travel search company based in Edinburgh. It serves 60 million monthly active users and is available in more than 30 languages, enabling users to compare prices from hundreds of travel sites when searching for flights, hotels and rental cars. It has established a leadership in?Europe?and a growing presence in the Asia-Pacific region and the Americas.
The acquisition is part of Ctrip's efforts at internationalization and building a global travel ecosystem.
On November 16, the company appointed Sun Jie as CEO and a member of the board of directors, effective immediately. Liang Jianzhang, co-founder and former CEO, will serve as executive chairman of the board with a focus on Ctrip's internationalization, innovation, information technology, and investments and strategic alliances.
"We are excited to welcome Skyscanner into the Ctrip group. Ctrip and Skyscanner share the same passion and dedication in providing travelers around the world with better services. This acquisition will strengthen long-term growth drivers for both companies. Skyscanner will complement our positioning at a global scale and Ctrip will leverage our experience, technology and booking capabilities to Skyscanner's," Liang was quoted as saying in the statement.
Overseas markets will be the focus of Ctrip and it will lead domestic service companies to "go global."
"We hope that not only domestic citizens travel abroad but also that foreign visitors come to China," Liang was quoted as saying in a separate statement the company sent to the Global Times on Thursday.
Zhu Zhengyu, a tourism analyst at Beijing-based market consultancy Analysys International, said Ctrip has started its internationalization from the ticketing sector for a reason.
A large number of Chinese people travel abroad every year, but most of them book tickets from domestic airlines due to limited choices from foreign airlines, according to Zhu. "By acquiring Skyscanner, Ctrip will control more foreign airline resources, which will be helpful to its ticketing business," he said.
An estimated 117 million Chinese people traveled overseas in 2015, up 9 percent year-on-year.
In its latest financial statements released the same day, Ctrip reported net revenue of 5.6 billion yuan (6 million) in the third quarter of 2016, up 75 percent year-on-year. Transportation ticketing revenue was 2.4 billion yuan, up 101 percent.
As part of its internationalization drive, Ctrip has arranged agreements on strategic investment and cooperation with U.S. tour operators such as L&L Travel Enterprises Inc, Sea Gull Holiday and Toursforfun.com. It has also become a major shareholder of Indian leading travel booking platform MakeMyTrip.
Ctrip now has a broad reach in North America as well as Europe, and it has entered India, which Ctrip said is a market with potential.
But Zhu noted that localization is crucial for Ctrip's international operations. "Travel has obvious regional features. Consumers from different cultural backgrounds can be very different in consumption habits, which entails providing services for specific consumers," he said.