Creating the veritable 800 pound Chinese OTA gorilla. Ctrip, Qunar share swap creates dominant player in China.

China’s big two players in online travel have effectively merged operations with a share swap deal.

Ctrip and Qunar will combine travel products and services which will give the companies a market share of up to 70-80% according to analysts.

“After this deal, these two companies will own the majority of the market share in China. They can coordinate a strategy in such a way that they can continue to grow market share, but meanwhile profitability and the bottom line should remain in good shape, which meets investors’ expectations and is good for both companies,” Summit Research analyst Henry Guo told Bloomberg.

Qunar majority shareholder Baidu Inc will own 25% of Ctrip, while Ctrip will gain a 45% share of Qunar.

“It demonstrates Baidu’s continuing commitment to online travel, an industry with tremendous potential ahead,” said Baidu chairman Robin Li. Qunar processed 32% of online air bookings last year while Ctrip had a 39% share of hotels in the China market according to latest independent data.

The move comes after an unsuccessful bid by Ctrip to buy out Qunar earlier this year.The online travel market will surge to more than $200 billion within five years, according to research at Goldman Sachs.

Source: Bloomberg News

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