Beijing Utour International Travel Service Co Ltd (UTour) announced on February 29 that it planned to take full ownership of Huayuan International Travel (HuaYuan) for RMB 2.6 billion. The funds for the purchase will be raised through a public offering of 65.61 million shares at RMB 35.82 per share plus RMB 250 million in cash.
UTour will also issue a private placement of an unannounced amount of shares for a bid price of RMB 42.01 per share to raise no more than RMB 2.6 billion. This funds will be used to pay off the RMB 250 million cash in the deal as well as establish an overseas destination platform and a management and analysis platform of outbound-cloud big data.
In the meantime the company has signed a strategic cooperation framework agreement with Shanghai Ctrip to carry out their agreed O2O strategy on outbound holiday travel and undertake comprehensive win-win collaborations in product research and development, content purchase, distribution and other travel services.
The strategic partner, Ctrip, will hold 5.07% of UTour after the completion on the HuaYuan deal.
HuaYuan mainly operates outbound tourism wholesale, MICE business and business representation. According to the Agreement on Compensation for Prediction on Profit, Huayuan is committed to achieve net profit of no less than RMB 110 million in 2016, no less than RMB 250 million in 2016 and 2017 combined, and no less than RMB 430 million from 2016 to 2018.
UTour and HuaYuan are both prominent operators in China’s outbound travel wholesale market. The mega-merger of the two will reshape the outbound travel wholesale in China, further strengthening their leadership in outbound wholesale, especially of travel routes to Europe. Coupled with the previous consolidation with Bamboo Garden International Travel (ZhuYuan International), the new company will have an edge in product design, supplier side purchase and customer sharing. (Translated by Jerry)
Read earlier brief also earlier speculation
