Ctrip and Qunar agree share swap and co-operation

Chinese OTAs Ctrip and Qunar have confirmed a share exchange agreement and business co-operation, a few months or so after a very public spat over a confused takeover bid.

Today's announcement from Ctrip says that, as a result of the share swap, Qunar's parent company Baidu will control some 25% of Ctrip's aggregate voting interest while Ctrip will own shares in Qunar worth 45%.

"Baidu and Ctrip have also agreed to a business cooperation across a broad base of products and services. Baidu expects to continue its existing business cooperation with Qunar," the statement added.

As a result, there is a lot of movement in terms of the board make-ups of both businesses. Ctrip's CEO James Liang and COO Jane Sun have joined Qunar's board of directors, while Baidu's CEO Robin Li and its head of investments, mergers and acquisitions Tony Yip have been appointed to Ctrip's board of directors.

Qunar's statement adds further board changes, and also talk about Baidu "selling" shares rather than Ctrip's use of the word "exchange".

Neither statement talks in cash terms.

The background to this announcement is worth noting. In June this year Qunar told the markets that it had rejected a takeover offer from Ctrip - Ctrip responded by saying that the takeover offer was, in fact, its response to an unsolicited approach by Qunar and that its offer was then been rejected by Qunar.

Ctrip's statement clearly said: “[Ctrip] is no longer interested in pursuing a potential M&A discussion with Qunar”

A lot has happened since then. It is only six weeks since Baidu announced that it was "strengthening its strategic alliance with Qunar" around the same time that Qunar announced a new corporate structure.

However, today's announcement is still a significant u-turn and indicative of the constantly changing dynamics of the online travel sector in China. Something must have happened, either operationally or corporately, for Ctrip and Qunar to agree this deal. What that is will likely remain unknown.