Priceline (NASDAQ:PCLN) is investing $500M in Chinese online travel leader Ctrip (NASDAQ:CTRP) through a convertible bond, and has been granted permission to buy Ctrip shares in the open market over the next 12 months. Between the bond and the share purchases, Priceline can hold up to a 10% stake.
The companies are also expanding their existing partnership (formed in 2012). Priceline will provide Ctrip customers access to its 500K+ non-Chinese accommodations, and Ctrip will provide Priceline customers access to its 100K+ Greater China accommodations.
In addition, Ctrip will provide access to Priceline's rentalcars.com and OpenTable inventory, and Priceline will promote Ctrip's air/attraction ticketing services to its customers. Priceline will have the right to nominate an observer to Ctrip's board.
The alliance poses a fresh challenge to Expedia-controlled eLong (NASDAQ:LONG) and Baidu-controlled Qunar (NASDAQ:QUNR). Expedia recently shot down a rumor stating Ctrip was looking to acquire Expedia's eLong stake.
CTRP +14.2% AH.