Baidu to Buy Majority of Travel Site Qunar for $306 Million

Baidu Inc., owner of China’s most- popular search-engine, said it agreed to buy a majority stake in China travel site Qunar for $306 million.

The purchase will close in the third quarter, Beijing-based Baidu said in a statement today. The deal will be financed by a third-party loan, it said.

Baidu is boosting spending on technology and stepping up investment to extend its dominance of the search-engine market in China into other services such as online commerce and video. The company is becoming “more active” in investing in technology firms, seeking out electronic-commerce, mobile and social networking assets, Chief Financial Officer Jennifer Li said in an April interview.

“Travel has long been one of the top categories on Baidu, and the number of travelers in China has been growing very rapidly,” Li said in today’s statement. “So this is a market of obvious strategic importance to us.”

Qunar.com, which means “Where do you want to go?” in Chinese, was founded in February 2005 and is headquartered in Beijing. It provides information on flight tickets, hotels, packages, visa and other travel service, real-time price query and comparative information services, according to its website.

In March, Baidu said it was among a group of investors that paid a total of $50 million for a stake in Anjuke Inc., a Shanghai-based property-listings site.

Tencent’s Purchase

Baidu’s shares fell 54 cents to $128.68 at 4 p.m. New York time in Nasdaq Stock Market trading. It has gained 33 percent this year. The company’s stock has more than tripled in U.S. trading since main rival Google Inc. (GOOG) announced plans in January 2010 to pull its search engine out of China.

Baidu’s purchase follows a May 17 announcement that Tencent Holdings Ltd. (700), China’s biggest Internet company, bought an $84.4 million stake in ELong Inc. to expand in online travel. Tencent acquired a 16 percent stake in ELong to become the online-travel company’s second-biggest shareholder behind Expedia Inc. (EXPE)

Both Elong and Qunar compete with Ctrip.com International Ltd. (CTRP) in China’s online travel market.

Qunar was co-founded by Fritz Demopoulos, Chenchao Zhuang and Douglas Koo. Demopoulos is stepping down as chief executive of Qunar, to be replaced by Zhuang, the statement said.

Qunar was backed by venture capital firms GSR Ventures of Beijing; Mayfield Fund and GGV Capital both of Menlo Park, California; and Tenaya Capital.

Google, owner of the world’s most popular search engine, accounted for 19.2 percent of China’s search market by revenue in the first quarter, declining from 19.6 percent three months earlier, according to research company Analysys International. Baidu’s market share rose to 75.8 percent from 75.5 percent, according to Analysys.

Google has been losing share in China’s search-engine market since the Mountain View, California-based company said last year it was no longer willing to comply with Chinese regulations to self-censor Web content. The company shut its Google.cn service and redirected Chinese users to an unfiltered site in Hong Kong.

--Edmond Lococo, with assistance from Mark Lee. Editors: Anand Krishnamoorthy, Lisa Rapaport

To contact Bloomberg News Staff on this story: Edmond Lococo in Beijing at +86-10-6649-7507 or elococo@bloomberg.net.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.