£500m windfall for SEP
Skyscanner sold to Chinese company for £1.4bn
The deal, the biggest in Scotland this year, means a huge pay day for Skyscanner’s founders and investors such as Scottish Equity Partners (SEP) which owns a third of the equity, amounting to about £500m.
It comes just days after FanDuel, the other so-called Scottish unicorn – companies worth $1 billion – agreed to merge with a US rival.
In dollar terms the Ctrip deal values Skyscanner at $1.74bn. Ctrip has bought out the majority shareholders and will acquire the remaining shareholders’ shares.
Skyscanner co-founder Gareth Williams, whose 15% entitles him to about £210m, said the company will remain “operationally independent”. It has 700 staff and 10 offices around the world.
This is the largest travel tech acquisition in Europe to date and SEP managing partner Calum Paterson (below) told Daily Business it is in line for an “exceptional return”.
He said: “SEP is the largest shareholder in Skyscanner and currently owns approximately one third of the equity on a fully diluted basis, which we have agreed to sell to Ctrip.“We did have a higher stake than this previously, but sold some of our shares in secondary transactions to enable some of the more recent investors to come on board.
“We first invested in 2007 and invested a total of £9m, some of which has been realised before this deal. No comment is being made on individual returns but the deal does represent an exceptional return for our fund and our investors.”
In an earlier official statement, he said: “Ctrip is the ideal partner to enable the company to extend its global reach, grow even more rapidly and continue to deliver a fantastic product that is greatly admired by travellers across the world. We are particularly pleased that Skyscanner will continue to be headquartered in Edinburgh and to operate independently.”
Ctrip chairman James Jianzhang Liang said: “Skyscanner is one of the largest travel search platforms in the world. Skyscanner will complement our positioning at a global scale.”
The Skyscanner website serves 60 million monthly active users and is available in more than 30 languages. It was established in 2001 by Mr Williams, Barry Smith and Bonamy Grimes and has been looking for an initial public offering or a trade sale.
The company was valued at $1.6bn in a funding round in January, when it raised £128m from a group of investors that included Malaysia’s sovereign fund, Khazanah Nasional, Yahoo Japan, fund manager Artemis, investment firm Baillie Gifford, and private equity firm Vitruvian Partners. For Sequoia, the US company, it was its first European investment.
The deal, announced on the New York Stock Exchange last night, will mainly comprise cash, with the rest in Ctrip ordinary shares and loan notes.
Shanghai-based Ctrip, founded in 1999, is listed on the Nasdaa exchange in New York and partly owned by the Chinese search company Baid.
It provides online booking for airline and railway tickets as well as hotels, and describes itself as China’s largest travel company.
It generated $51bn in gross merchandise value in 2015, the firm said on its website.
Mr Williams said: “Ctrip is the clear market leader in China and a company we can learn a huge amount from.”
He said the acquisition would take Skyscanner “one step closer to our goal of making travel search as simple as possible for travellers around the world.”
Speaking during Ctrip’s third quarter earnings update, its new chief executive Jane Jie Sun said the deal will close before the end of 2016 so it would not have a material impact on Ctrip’s earnings this year.
Sun said Skyscanner has strong top-line growth and is profitable with “healthy” EBITDA margins.
Sun added that the Skyscanner acquisition would strengthen Ctrip’s overseas air ticketing capabilities, and Ctrip’s global footprint. Skyscanner could provide the front end while Ctrip could provide backend booking technology to spur growth.
Skyscanner was advised by Pinsent Masons whose team was led by Alan Diamond and Rosalie Chadwick. They were assisted by a multi-disciplinary team including corporate specialist Jennifer Malcolm and employee incentives expert Christine Yuill.