Shares in Caissa Tosun Development and UTour Group plunged after the two Chinese travel agencies which focus on overseas travel, a sector that has been particularly hard hit by the Covid-19 pandemic, said they will no longer pursue their planned merger due to market uncertainties and other complexities.
The termination will not have an adverse impact on the companies’ operations, nor will it impair the interests of stakeholders, especially small and medium shareholders, both parties said yesterday.
“It is difficult for outbound travel to recover in the short run,” said Zhao Huanyan, chief expert at Huamei Restaurant Management Consulting. This will have an especially big impact on companies like Caissa, so scrapping the merger makes sense. The key now lies in how the two parties will shift their focus to the domestic tourism market which has recovered strongly, he added.
In June the two firms had said they planned to merge through a stock swap, mostly likely to better weather the Covid-19 travel crisis together. Beijing-based Caissa would take UTour private by purchasing its equity at a price of CNY6.89 (USD1) per share, amounting to CNY6.2 billion (USD972.8 million). But the plan was opposed by Caissa’s second largest shareholder HNA Tourism Group which said that the move needs more research.
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