Internet M \u0026 A drama: Why Baidu acquisition of Ctrip, where to go?Recently, there was news that Baidu holding Ctrip transaction has been drawing to a close, then push Ctrip, where to merge the two online travel platform. Some media pointed out that Ctrip is secretly promoting the merger negotiations and where to go. However, Ctrip, where to official denote no comment, did not know. The industry believes that if the final takeover is successful, Baidu will gain a monopoly position in the online travel market, its strategic O2O added an important piece. So, Baidu acquisition where to go, what path Ctrip strategic choice behind? Business model is saying what is the relationship? At the moment, there are many on Ctrip Baidu acquisition rumors. Overall, there are some background on Nike Zoom Soldier VII the strategy to be discussed. First the background: Baidu search giant as PC side is facing pressure to change the moving end the search. From the development of American Google search, the two search keywords have become a very important area. The current secondary search keywords include: tourism, health care, publishing, buy, retail, finance these six areas. These areas appear once giants, many are no longer dependent on Baidu search for content, but rather directly to these two areas. For example, search for travel information, directly on Ctrip, where to go. From this large background view, Baidu's expansion and acquisitions downstream keyword search giant, has become an inevitable trend. Air Jordan Outlet The second background is: Where Baidu through strategic acquisitions, has earned pours. Ctrip different, where to distribute mainly to the middle of page traffic, like a big supermarket. It was first profit model is Ctrip, mango net OTA pull in, control Internet data is its core strengths. Baidu was very tendency this middle of the page flow distribution business model, where the need Nike Air LeBron EE to distribute a portion of Baidu traffic to their own, so the two sides hit it off. But Ctrip is a similar consumer goods store OTA, primarily to achieve profitability through resource under the control lines, patterns tend to 'C' in this area, to where more B2B business, both of which is complementary. So, why the rush to consider the acquisition of Baidu, Ctrip? That there are three key factors and strategic considerations. First, Nike Air Max go to an intermediate page where the flow channels divide issue, control of resources by the line. Currently, the online travel mode is to 'import + buy + channel' paradigm shift combination of the three. Where last year, wants Nike Lebron X Elite to import, which led to Ctrip, mango, eLong on its shelves withdrawals - after all, where to distribute the referee before the data, now renamed athlete, we do not play with it. Therefore, Baidu and where to have felt the pressure of the kinds of profit model transformation. Secondly, under Ctrip mode line too heavy, urgent need to improve profitability. Ctrip Q4 quarter last year, gross margin was 70%, the net profit margin is only about 13%. Because the line sales promotion costs accounted for much, if you can get online promotion flow, Ctrip will undoubtedly improve profitability, which is Womens Nike Kobe VIII the most fancy Ctrip. Third, BAT are doing a lot in recent years, cross-border acquisitions, looks more and more like the looks. Because all three drivers in the layout around them essentially: one side of the Internet PC to the mobile Internet transformation, such as O2O; the second is appropriate to extend the traditional industries; the third is a card layout Competitive Strategy. So Baidu acquisition of sticky web, layout O2O; Alibaba acquired control of the entire financial market management software development, the Hang Seng e, trying to control the operating system and the underlying data, control over the financial sector; micro-channel through the flow of cash the way, will be its easy fast and Jingdong through the line integration. Shares of public comment, also be integrated by way of cash flow. As an online travel giant, Ctrip downstream great synergies. Where Although there are a wealth of online resources, but its transformation is still subject to OTA. Some time ago, Ali also tried to buy Ctrip. So, Baidu is more urgent strategic acquisitions Ctrip. Because Ctrip mastered 35% of the domestic online travel market, once the competition opponent control, overhead lines under its resources, and even cancellation, will have a direct impact to where the moat. However, in the process of acquisition of Ctrip Baidu, but also faces some challenges. The first challenge comes from the valuation. Baidu practice in accordance with past acquisitions, or holding, or full acquisition, or the same Nike SB Dunk Low as the acquisition of where to go, and slowly realize Holdings through strategic acquisitions. But the problem is, Ctrip current ownership structure is highly decentralized, James Liang holding 1.6% of institutional shareholders holding 35% of the total negotiation cost is very high. Press Ctrip is currently $ 7.3 billion in market value, the acquisition premium is estimated to be $ 10 billion. If it is purely a cash acquisition, the acquisition price is very high. In this regard, Baidu can be achieved through a share swap takeover, where to Ctrip be convertible, plus some cash, relatively low-cost form of cash acquired. In terms of mergers and acquisitions and management and control, there are two ways: one is by going and Ctrip through Womens Nike LeBron 11 the 'convertible + cash' approach where complete low cost acquisition. Another is holding Ctrip Baidu first, and then consider where to Ctrip as two parallel companies, and how to integrate. I guess by way of cash and convertible, and lower cost. Potatoes and Youku merger is to take 100% of such convertible, Wang Wei potatoes quit, lower this cost price. The second challenge is the strategic and organizational synergies can be achieved after the merger. Through this acquisition, I think both sides can achieve the expected synergies of the three: First, reduce marketing costs Ctrip offline. Ctrip gross margin of 70%, the actual income is only about 13%. Where the introduction of online resources that can effectively improve the net profit margin. Second, where to go and Ctrip Once integrated, according to the current 30% market share of Ctrip, plus where to go more than 20% market share, it will create a great impact on the entire bargaining power of online travel. Third, the two sides shared the platform's organizational structure, including the functions of the background, the driver and co underlying data mining, based on the Nike Air Jordan 5 Women integration of marketing synergies, etc., will bring some effects at the organizational level. Youku potatoes merger and different, where to Ctrip more of a downstream mode (to the middle of the page where the supermarket traffic, traffic Ctrip and mango distribute these OTA, OTA redistribute to the line), the value chain in Different aspects of the integration more difficult. Combination between the two will have more chemical reactions. However, these synergies depends largely on the level of collaboration between organizations. Robin Li, Baidu's James Liang Ctrip, where to go Zhuang Chen Chao, are relatively strong character people. Their own leadership style and with strength, there will be a lot of impact Nike Zoom Hyperflight PRM on the integration of results. The process of integration in the organizational structure, the uncertainty factors control people from the yet to be defined. Youku and potatoes integration, Wang Wei potatoes left, I believe that the whole package of M \u0026 A composition part of the plan, which favors the formation of a headquarters, conduct an authoritative control. This avoids fluctuations in bilateral personnel, Cheap Nike Free Outlet and promote synergies as soon as possible. The third challenge is how to deal with Baidu after the merger control mode. Currently, Baidu search in two Nike Air Max Lebron 10 Low areas, has layout O2O buy and tourism, the future can be expected as well as health care, finance and so on. I think, Baidu should not do operational control, because tourism is just one important business layout. Baidu more consideration to the strategic management and control, to ensure that each child business synergies reached. From the tourism sector is concerned, Baidu's control may have two ways: First, keep going where independent and Ctrip two headquarters, through collaboration between the two parallel control company to complete; the second is through cash and convertible form Nike Air Jordan 10 a Command, through the plate of coordination, to promote mergers and acquisitions is expected to reach a final effect. Baidu is in urgent need of these two core elements of the forward-looking holistically. Currently, the face of takeover speculation, capital markets go, Ctrip, Baidu's shares have done some of the reactions, the stock fell 4% to 5%. This is because when you integrate Baidu and Ctrip Nike Air Griffey Max Where different business faces many challenges and uncertainties, capital sector temporarily on these short-term uncertainty risk aversion. But I think, if Baidu can integrate good, both in terms of customer bargaining, coordination of data mining, or in lower marketing costs, can promote tripartite future long-term profit growth can be expected. But it still depends on the effective management and control retained after Nike KD 7 Kids the merger integration and talents. Wen / Wang Wei (management wisdom Advisory Group exhibition management consulting and capital Palladium founder and CEO. Former Director of Roland Berger Strategy Consultants, vice president and principal consultant Hewitt Greater China, Watson Wyatt Chief Adviser . worked Huawei, Tencent, China Resources Group, PAG, Alibaba and other companies to provide strategic business model and management framework for the integration of consulting services) Source: management wisdom