In a regulatory filing May 28, on the eve of the long holiday weekend, Expedia revealed that it purchased 16.9% of eLong’s ordinary shares.
Expedia states that the purpose of the transaction was to increase its investment in eLong.
Spokeswoman Katie Deines Fourcin adds: “The increased investment reflects Expedia‚Äôs continued confidence in eLong and signals Expedia‚Äôs continued belief in the importance of the Chinese travel market and its long-term growth potential.”
Soleil Securities analyst Jake Fuller says Expedia already owned 100% of eLong’s high-vote ordinary shares, and thus controlled 96% of the vote at eLong.
eLong has two types of stock: high-vote ordinary shares and ordinary shares.
“Each high-vote ordinary share is entitled to 15 votes versus one vote for each ordinary share,” Fuller explains.
eLong, which trades on the Nasdaq, soared on the news of Expedia’s increased investment.
Expedia has vowed to sink $50 million into its China investments over the next few years, so this eLong transaction can be seen as part of that broader move.
Expedia’s strategy in China is to work through local, Chinese brands rather to engender any “Expedia” brand loyalty.
In 2009, about 37% of Expedia’s revenue came from outside of the U.S.
Expedia’s aim is to get its U.S. domestic and international revenue on equal footing.