China online travel firms Ctrip, Qunar set to announce merger

International, Ltd. (ADR) (NASDAQ:CTRP) and Qunar Cayman Islands Ltd (NASDAQ:QUNR) shares fired up, near their 52-week high, in the early market trading today, after the two largest Chinese online travel agents agreed to share swap and create a partnership which would form the largest Chinese online travel network.

Beijing-based Qunar, an online travel search and services firm controlled by Baidu Inc., is to announce a merger with rival Ctrip.com worldwide Ltd., according to Chinese media reports. As a result of the transaction, Baidu will own ordinary shares of Ctrip representing approximately 25% of Ctrip’s aggregate voting interest, and Ctrip will own ordinary shares of Qunar representing approximately 45% of Qunar’s aggregate voting interest.

When Qunar raised $500 million in fresh funding back in June it revealed that it had declined an acquisition offer from Ctrip.

Ctrip and Qunar offer users different experiences.

Four senior managers from Ctrip, including president Liang Jianzhang and co-president Su Jie, have been appointed to Qunar’s board, and two senior managers from Baidu, chairman Li Yanhong and vice president Ye Zhuodong, have been appointed to Ctrip’s board.

China’s big three Internet companies- Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Baidu-all have an increasing appetite for travel businesses.

Ctrip and Qunar share prices jumped in trading on Monday; both have been under pressure amid rising competition from larger, better-funded Chinese Internet companies.

Qunar is China’s leading seller of airline tickets, while Ctrip dominates hotel bookings. Ctrip, which is similar to USA online travel services like Expedia, provides full services and is often used by business travelers.