Business / Companies

Qunar plans to go private as firms return to China bourses

(Agencies) Updated: 2016-06-25 07:50

Qunar Cayman Islands Ltd has received a preliminary offer from Ocean Management Ltd to buy all outstanding shares of the online travel agency, the move making it the latest example of a proposed privatization of a US-listed Chinese company.

The private equity firm offered $30.39 for each American depositary receipt and $10.13 for each ordinary share, according to a statement from Qunar on Thursday. The non-binding agreement is a 15 percent premium to the closing ADR price on Wednesday.

Chinese online trip-booking sites have benefited from a boom in overseas travel, though profits have been squeezed as the industry becomes increasingly competitive.

Qunar, once largely controlled by Baidu Inc, teamed up with its primary competitor, International Ltd, in October to take combined control of about 80 percent of China's online hotel and air-ticket markets. Ctrip in January said it would take a "significant" minority stake in Qunar.

"It makes little sense for Qunar to stay a public company," said Henry Guo, a New York-based analyst at M Science.

"The going-private procedure is usually quite difficult to accomplish, as the acquirer has to convince a large number of shareholders to accept a decision. There are not that many majority shareholders in Qunar, so the process should be much easier," he said.

Baidu owns 25 percent of Ctrip's aggregate voting interests, while Ctrip owns 45 percent of Qunar's aggregate voting interests. Baidu declined to comment.

The proposal follows dozens of other privatization offers for US-listed Chinese companies since the beginning of last year. Companies have been lured by the prospect of relisting in Shanghai or Shenzhen at higher valuations.

The wave of companies planning to return to Chinese bourses has sparked a review by the country's market regulator amid concerns that an influx of new listings could dilute share prices. Qihoo 360 Technology Co's $9.3 billion take-private agreement in December would be the biggest buyout of a US-listed Chinese company if completed.

China's internet companies have been seeking to expand amid a downturn in the domestic economy. Online retailer Inc this week announced it was buying Yihaodian, the e-commerce arm of Wal-Mart Stores Inc, giving the Chinese company greater scale and helping it challenge e-commerce market leader Alibaba Group Holdings Ltd.

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