- Priceline (PCLN) is up strongly following news Chinese online travel leader Ctrip (CTRP +21.1%), in which Priceline has an 11.6% stake, announced it's acquiring Baidu's stake in top rival Qunar (QUNR +15.9%) in exchange for shares.
- Expedia (NASDAQ:EXPE), which formed an alliance with Ctrip earlier this year as part of a deal to unload its 62.4% stake in struggling Ctrip/Qunar rival eLong, is also doing well.
- The deal leaves Ctrip owning 45% of Qunar's voting interests, and Baidu owning 25% of Ctrip's voting interests. It brings together China's two biggest online travel firms, and could lead each company to pare back the aggressive promotions and heavy marketing spend it has supported in the name of taking share from the other.
- HSBC's Chi Tsang: "Essentially it’s a merger between the two companies. If you look at the travel market, it’s such an obvious way to drive synergy through consolidation.” As part of the deal, Ctrip has won seats on Qunar's board, and Baidu seats on Ctrip's board.
- At current levels, Priceline's 17.5M-share stake in Ctrip is worth $1.58B. Expedia reports on Thursday afternoon, and Priceline on the morning of Nov. 9.