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By Leena Rao

Chinese internet giant Tencent (OTCPK:TCEHY) and U.S. travel bookings company Expedia (NASDAQ:EXPE) have invested in Chinese travel site eLong, (NASDAQ:LONG) totaling $126 million. Tencent has acquired approximately 16% of the outstanding shares for a total purchase price of $84.4 million and becomes the second largest shareholder of eLong.

Expedia has acquired approximately 8% of the outstanding shares for $41.2 million, holds 56% of the outstanding shares (Expedia held a a previous investment in eLong), making the company the largest shareholder in eLong.

This is actually the first investment in the travel market for Tencent and the funding represents a partnership as well, in which both companies will develop online travel products and will distribute eLong’s hotel supply to Tencent’s online community. Currently Tencent says it reaches 674 million active user accounts in China. And eLong’s hotel supply portfolio now covers over 150,000 hotel properties worldwide, including more than 19,000 hotels in China, and more than 130,000 internationally through its connection with Expedia.

Flush with cash, Tencent has made a number of major investments recently, including the A-Fund. The company is also rumored to be interested in buying MySpace and just bought Riot Games for $400 million.

For Expedia, the investment gives the company a stronger foothold in China, which is a “key region” for the U.S. travel company.

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Source: Expedia, Tencent Invest in Chinese Online Travel Marketplace eLong