China’s Qunar receives take-private bid

According to a statement, the proposed acquisition was priced at $30.39 per American depositary share and would be financed by a combination of debt and equity capital. Qunar shares spiked about 10% after disclosure of the non-binding offer and were last trading at $29.29 apiece.

Founded in 2005, Qunar operates a travel platform across desktop and mobile applications that caters to Chinese travelers and travel service providers. It generates revenue by selling sponsored search services and display advertising to travel agents as well as by providing a web platform for travel agents with limited or no online presence.

Annual revenue improved 137% during 2015 to RMB4.2 billion ($630 million); however, the company posted a RMB7.3 billion net loss for the year, following a RMB1.8 billion loss in 2014, on the back of increased operational costs. These expenses are expected to be exacerbated with the roll-out of a number of planned expansion efforts including product developments, product sourcing activities and sales and marketing initiatives.

Last year, Qunar agreed to an all-share merger with its primary competitor Ctrip only four months after it rejected a Ctrip buyout offer and then agreed a $500 million strategic investment. The merger resulted in Chinese internet giant Baidu trading away its controlling stake in Qunar and Ctrip taking a 45% interest in the company.

Ocean Management is an entity related to Ocean Imagination, a private equity fund dedicated to investing in travel-related industries in China. The firm's proposal extends a wave of consolidation moves in the sector, which most recently included Chinese online hotel booking site eLong agreeing to a buyout led by a consortium of existing shareholders, including Tencent Holdings and Ctrip.

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• Topics
• Greater China
• Consumer
• Buyouts
• Technology
• China
• TMT