Group in talks with investors to delist from Nasdaq
07/28/2020|4:28:12 PM|Reuters

Chinese online travel giant Group (Ctrip) is in talks with potential investors about funding its delisting from Nasdaq because of rising U.S.-China tensions and the coronavirus-driven hit to its business, sources told Reuters.

The management of China’s largest online travel firm, with a current market value of USD 16.5 billion, has reached out to a number of financial and strategic investors including private equity firms and domestic tech companies about joining a take-private deal, said four people with direct knowledge of the matter.

Ctrip’s move comes as U.S.-listed Chinese companies face tightened scrutiny and more strict audit requirements from U.S. regulators, while geopolitical tensions escalate between the world’s two largest economies. Those have prompted a number of Chinese companies to abandon a New York listing and move instead to an exchange closer to home.

Ctrip’s delisting discussions, which have not been reported previously, are at an early stage and are subject to change, cautioned the sources, who spoke on condition of anonymity because the matter is not public.

Deals being discussed include a delisting of search engine giant Baidu Inc, Reuters reported in May.

Both Ctrip and Baidu have held preliminary talks with Hong Kong Exchanges and Clearing about a possible secondary listing, Reuters reported in January.

Ctrip later decided to delist as the coronavirus outbreak hit its businesses badly in the first half and has weighed heavily on its valuation, said one of the people.

It reported a 42% year-on-year drop in net revenue in the first quarter of 2020 and a net loss of 5.4 billion yuan ($754 million). The company said it expected net revenue to decrease by about 67% to 77% year-over-year for the second quarter of 2020 due to COVID-19’s continued impact.

Its shares have fallen 17% so far this year while the Nasdaq Golden Dragon China Index, which tracks Chinese firms listed on the U.S. exchange, has gained 22% over the same period.

Ctrip’s diversified ownership structure, however, would present a challenge to getting shareholders’ backing for the delisting plans. Its biggest shareholder Baidu only held a 11.7% stake, followed by Scottish fund manager Baillie Gifford’s 7.7%, as of the end of last year, according to its 2019 annual report .

Its co-founders James Liang and Fan Min and other executives owned a combined 5.9% stake, showed the report.

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