Chinese Travel Site Qunar Gets Offer to Be Taken Private

  • Latest example of privatization of U.S.-listed Chinese company
  • Proposal is 15 percent premium for Qunar ADS on June 22

Qunar Cayman Islands Ltd. received a preliminary offer from Ocean Management Ltd. to buy all outstanding shares of the travel site, the latest example of a proposed privatization of a U.S.-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 Thursday. The non-binding agreement is a 15 percent premium to the closing ADR price on June 22.

Chinese 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, Ctrip.com 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,” Henry Guo, a New York-based analyst at M Science, said by phone. “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.”

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 on Thursday.

Take-Private Wave

The proposal follows dozens of other take-private offers for U.S.-listed Chinese companies since the beginning of last year, according to data compiled by Bloomberg. 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 U.S.-listed Chinese company if completed.

China’s Internet companies have been seeking to expand amid a downturn in the domestic economy. Online retailer JD.Com 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.

Qunar shares rose 8.8 percent to $28.75 at 12:14 p.m. in New York. They had fallen 50 percent this year through Wednesday. Qunar said it had formed a special committee of independent directors to evaluate the offer.

Ocean Management is an entity related to Ocean Imagination LP, a private equity fund focused on travel industries in China, according to the statement.

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