Tencent is bidding on travel company eLong to tap on the pockets of globetrotting Chinese travelers.
With its current 15 percent stake in eLong, the company extended a $622 million offer to buy the remaining stake at $18 a share, which is a 24 percent premium to its Friday closing price.
“Our proposal is conditioned upon the major shareholders in the company accounting for at least 70 percent in voting power of the company agreeing to support and to roll their existing equity in the company into the transaction,” said Tencent’s Chief Strategy Officer James Mitchell.
Some of the other shareholders include Ctrip, which bought a 38 percent stake in the company from Expedia in May this year, and hotel chain operators Keystone Lodging Holdings and the Plateno Group.
In a statement, eLong said it would consider the offer and intends to form a special committee to analyze and evaluate it.
Citing higher operation costs, the company reported a net loss of about $57.3 million in the second quarter against a net profit of about $5 million in the same period last year, according to the South China Morning Post.
Even though profit margins in the Chinese travel industry have seen an overall decline in recent times, big players like Alibaba and Baidu are betting big on the fast-growing industry.
By 2030, Chinese tourists are expected to make up about 40 percent of outbound Asian travelers, totaling 1.7 billion annual trips, according to research from Boston Consulting Group, The Wall Street Journal reported.