Baidu to Invest $306 Million in China Travel Website
BEIJINGBaidu Inc., China's leading search engine, said Friday it will invest $306 million in Chinese travel website Qunar.com Information Technology Co.
Baidu didn't specify the size of the stake that it would take, but said the deal would make it Qunar's majority shareholder.
"After the investment, Qunar will continue to operate as an independent company, while both companies will cooperate in certain areas of online travel search," Baidu said.
Baidu is aggressively expanding its product offerings, including investments in online video and e-commerce ventures, as Chinese Internet companies increasingly compete in each others' niches.
Companies such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd. are working on their own search technology to compete with the search giant. Tencent also recently made an investment in online travel company eLong Inc., in which Expedia Inc. also owns a stake.
Founded in 2005, Qunar provides a search engine for airline, train, hotel, and tour packages, and also offers group-buying deals and user discussion forums on its website. According to research firm iResearch, Qunar was the top-ranked travel site in March among Chinese web surfers, measured by daily unique visitors. It tracks 11,000 air routes and 102,000 hotels globally, according to a joint statement about the investment.
In an interview, Qunar Chief Executive Officer Zhuang Chenchao said the cash infusion will be spent on developing new services. "Our major investment will go into hotels online search. And we think wireless is growing and! that tr avel is a perfect match with mobile applications, so mobile applications will be the second direction that we will be moving in," Mr. Zhuang said.
Baidu is "doing this [primarily] because the travel industry is very large and complex," Mr. Zhuang said. "That's the business reason," but Baidu also hopes the move "will encourage the other start-ups to work closely with them," he said.
In the statement Friday, Baidu Chief Financial Officer Jennifer Li said, "Travel has long been one of the top categories on Baidu, and the number of travelers in China has been growing very rapidly, so this is a market of obvious strategic importance to us."
Former Qunar Chief Executive Fritz Demopoulos said last October that the company was considering an initial public offering in the second half of 2011, preferring a listing on a U.S. exchange. Mr. Demopoulos has since been replaced by Mr. Zhuang.
A company spokeswoman declined to explain the management change, but Richard Lim, a board member at Qunar venture-capital backer GSR Ventures and a minority stakeholder in Qunar, said the company still expects a public listing.
"We are holding onto the company," Mr. Lim said. "The intention is that it will stay an independent company, which we assume will eventually IPO."
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