China: Chinese travel services provider Ctrip, also known as Trip.com Group Ltd, is considering the possibility of going private and delisting itself from the Nasdaq stock market due to rising tensions with the United States and the impact of the coronavirus on its business.
According to Reuters, Ctrip’s management have contacted a number of financial and strategic investors from private equity firms and tech companies to discuss funding Ctrip’s delisting from Nasdaq, as US-listed Chinese firms face tighter scrutiny and more stringent audit requirements amid escalating tensions between the two nations.
It is reported that the discussions are at an early stage of negotiations at present.
The travel outfit, worth $16 billion, has been US-listed for 17 years but the breakdown in nation relations, combined with the pandemic, a surge in demand for domestic travel and Ctrip’s clean balance sheet, may tempt it to go private, if it can find the required funding. If the move succeeds, it would represent the largest take-private deal of a New York-traded Chinese firm in history.
One obstacle in the way of taking Ctrip private is the fact that it is expected to lose $359 million this year according to recent forecasts, as tourism spending plummeted in the first quarter of this year. It also reported a 42 per cent year-on-year drop in revenue in the first quarter, and net revenue was expected to drop by 67-77 per cent in the second quarter of 2020 due to the impact of Covid-19.
At the same time, its shares have dropped by 17 per cent so far.
However, the company maintains its passenger traffic recovered to 70 per cent year-on-year in June and it is still working on hundreds of million dollars in net cash to stay afloat.
Ctrip was founded in 1999 by James Liang, Neil Shen, Min Fan and Qi Ji, and now also operates under the Trip.com Group brand name. With over 400 million registered users worldwide, the group has become the largest OTA in China and one of the largest travel service providers in the world, now owning online travel agencies such as Trip.com, Ctrip, Skyscanner and Qunar.
As well as accommodation reservation, it provides services including transportation ticketing, packaged tours and corporate travel management.
Earlier this month, channel manager Rentals United announced a partnership to directly integrate with the Trip.com Group, while its CEO, James Burrows, suggested that Chinese tourists were likely to be among the first in the world to restart travel in 2020.