eLong Shake-Up: Buyout Ahead?
A new management shake-up in the top ranks of eLong (NASDAQ:LONG) didn't excite investors too much, but hints that something is happening behind the scenes at this online travel laggard controlled by US giant Expedia (NASDAQ:EXPE).
The shake-up has seen eLong's CFO and COO both resign, though the company's CEO is staying in his current position, at least for now. Rumors circulated earlier this year that a buyout could be coming for eLong from sector leader Ctrip (NASDAQ:CTRP), though such a deal never came.
Those earlier talks, which came in late June, sparked a 70 percent jump in eLong's thinly traded stock in the following weeks, as investors hoped for an offer containing a big premium (previous post). Shares have given back some of the gains since then, but are still nearly 50 percent above where they were before the rumors. By comparison, this latest report of a shake-up in the company's top management ranks left investors unimpressed, with eLong's shares unchanged in the latest trading session.
Frankly speaking, I'm not sure what exactly Expedia and Tencent (OTCPK:TCEHY, HKEx: 700), eLong's 2 largest shareholders, are trying to do with this company. eLong was one of the sector's earliest players, but despite long-time backing by Expedia, never managed to seriously challenge Ctrip's dominance. More recently, the company has been eclipsed by several much younger rivals, including the recently listed Qunar (NASDAQ:QUNR) and Tuniu (NASDAQ:TOUR). Even after its share price jump, eLong's market value stands at just $670 million, about the same as Tuniu and far less than the $3.4 billion and $8 billion for Qunar and Ctrip, respectively.