China’s PE-backed Tongcheng merges with Wanda Tourism

According to a statement, Beijing Wanda Tourism Investment (Wanda Tourism), a unit controlled by the Wanda Culture Industry Group, will merge with Tongcheng subsidiary Tongcheng Guolu - which focuses on leisure travel and attractions online ticketing - to form a new entity. 

The deal will be structured as an acquisition of Wanda Tourism by Tongcheng, with Wanda Culture receiving cash and enough stock to make it the largest shareholder in Tongcheng. Following the transaction, Tongcheng will have a market value in excess of RMB20 billion ($3 billion), the company said in an internal letter cited by Tencent QQ News.

Meanwhile, Tongcheng's management team has invested a combined RMB1 billion into the new company in order to secure voting rights on the board. Existing shareholders, including Wanda, Ctrip International and Tencent Holdings, will all support Tongcheng's independent development with an IPO the ultimate objective.

Wanda Group set up Wanda Tourism in 2013. Over the past few years, the unit has acquired 12 local travel agencies in different cities, generating RMB12 billion in revenue in 2015. 

Founded in 2004, Suzhou-based Tongcheng - perhaps best known for the Ly.com and 17u.cn websites - provides online travel services including tickets for scenic attractions, hotel booking, domestic and international air tickets and cruises. It is also trying to expand offline, having opened 300 outlets over the past few years. The group split its leisure travel and scenic attractions booking businesses into a new entity in June. 

Tongcheng previously raised several rounds of funding from PE and strategic investors. Oriza Holdings - then called Suzhou Ventures - put in $2.9 million in 2010 and then the company received an undisclosed sum from Tencent Holdings in 2012. Two years later, it raised $82 million from a consortium including Tencent, Boyu Capital and Oriza, as well as $200 million from Ctrip, which became the second-largest shareholder after the management team.

Last year, Wanda Group, Tencent and CITIC Capital participated in a RMB6 billion financing round for Tongcheng. Wanda Culture Industry Group led the round with a commitment of RMB3.58 billion.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Consumer
• China
• TMT
• CITIC Capital
• Tencent
• Dalian Wanda Group
• M&A