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Analysts view Ctrip's acquisition of Skyscanner as "best buy" in travel industry

(Xinhua)    20:50, November 25, 2016

The acquisition of British flight search company Skyscanner by China's online travel giant Ctrip is viewed by many analysts as the "best buy" in the travel industry.

The Nasdaq-listed Ctrip.com International announced Wednesday that it will acquire Skyscanner, a leading global travel search site headquartered in Edinburgh, for approximately 1.4 billion British pounds (1.7 billion U.S. dollars) and become its majority share-holder.

Ctrip said the purchase, to be concluded by the end of this year, will be mainly in cash with the balance in shares and loan notes.

Ctrip's acquisition of Skyscanner is "the best buy" in the travel industry, said Adelphi Venture Capital.

The rise of the Chinese middle class means its citizens are traveling like never before, it said. "We believe one company which is poised to continue its meteoric rise unabated is Chinese online travel agency Ctrip."

The acquisition is also regarded by many as a win-win deal for both companies.

James Jianzhang Liang, Ctrip co-founder and executive chairman, said: "Skyscanner will complement our positioning at a global scale, and we will leverage our experience, technology and booking capabilities to help Skyscanner."

Daiwa securities analyst John Choi told the Wall Street Journal that there are many opportunities for the deal to be mutually beneficial.

Choi said Ctrip sees synergies between itself and the so-called meta-search technology that Skyscanner uses for comparing flights and other travel deals across different websites. For example, booking systems and inventory could be shared.

Ctrip will also help Skyscanner maximize revenue from each customer interaction by getting customers booking air travel to also buy travel insurance and rental cars, Choi added.

However, the deal still raised concerns about foreign takeovers of British companies.

Ctrip's Liang confirmed that Skyscanner's current management team will continue to manage Skyscanner's operations independently as part of the Ctrip group.

"We are much still a U.K. company," Skyscanner's Williams said, adding that its U.K.-based staff will not lose their jobs.

Bloomberg News commented in an article on the acquisition that the deal is in line with "government interest."

British Prime Minister Theresa May's spokeswoman Helen Bower told reporters: "It's not something where I've heard particular concerns raised.

"We want to see inward investment into this country. We want to see our entrepreneurs succeeding," Bower said. "And one of the things we've been setting out this week is how we're going to be seeking to do more to encourage innovation, to encourage new and small businesses to grow and scale up and looking at how we can support that."

Founded in 1999, Ctrip is China's top online travel service provider. In 2015, Ctrip bought its rival Qunar and became the top online travel agency in China.

Ctrip made net revenue of 5.6 billion yuan (820 million U.S. dollars) in the third quarter of 2016, up 75 percent from a year earlier, according to its latest financial report.

Skyscanner was formed in 2001 by three Manchester University graduates after one of them was frustrated by the difficulties of finding cheap flights to ski resorts.

Skyscanner reported revenue of 120 million pounds (149 million dollars) last year, up 29 percent year on year, according to its filings.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Zhang Tianrui, Bianji)

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