Leading online travel services provider Ctrip.com International Ltd announced late Monday that it has reached a share swap deal with Baidu Inc, which will allow the company to own a major share in its biggest rival.
Under the deal, Ctrip will own a controlling stake of about 45 percent in its rival Qunar Cayman Islands, which is controlled by Baidu.
Baidu in return will own a stake of about 25 percent in Ctrip, making Baidu the biggest shareholder of that travel provider, according to a statement from NASDAQ-listed Ctrip.
After the investment, Qunar, which is listed on the New York Stock Exchange, will still be an independent company, domestic news portal tech.sina.com.cn reported on Monday, citing Liang Jianzhang, chairman and CEO of Ctrip.
"The partnership will pose great competition to other online transportation and accommodation booking services providers," Zhu Zhengyu, an analyst at consultancy Analysys International, told the Global Times Monday, adding that websites such as alitrip.com, which is part of Alibaba Group Holding, will be threatened.
Zhang Yi, CEO of Guangzhou-based market consultancy iiMedia Research, told the Global Times on Monday that the deal could increase Baidu's competitiveness in its rivalry with e-commerce giants Tencent Holdings and Alibaba.
The deal comes around five months after Qunar rejected a buyout offer from Ctrip.
Ctrip had about a 36 percent share in China's online travel booking sector in 2014, followed by Qunar with 22.5 percent, a report from Analysys International said in April.
Zhang said other leading online companies would also seek partnerships or mergers to increase their competitiveness.
Leading online taxi-hailing providers Didi and Kuaidi announced a merger in February.
Group-buying site meituan.com announced a partnership with rival dianping.com on October 8.
