Alibaba Group Holding Ltd. (BABA), in its first big investment following its $25 billion record breaking IPO, is spending around $457 million to acquire a 15% stake in Beijing Shiji Information Technology- a company that provides hotels with technology software and services.
Beijing Shiji disclosed in a regulatory filing that Alibaba's Taobao unit will purchase 54.55 million shares of the company for 51.52 yuan per share. The deal is expected to close early next month.
Acquisition Helps Taobao Travel
The alliance with Beijing Shiji blends perfectly with Alibaba's strategy to link its online and mobile services with brick and mortar businesses. Using its electronic payment system, Alipay, it already lets users pay for various offline services like meals at restaurants and taxi rides.
This deal could help Alibaba’s travel-booking business—Tabao Travel. Tabao Travel allows users to book package tours, hotels and plane tickets.Last year, Alibaba partnered with Chinese travel website Qyer.com in an undisclosed deal. This was done to augment the Taobao Travel business.
Alibaba has entered into more than a dozen deals this year. This is in an effort to improve its present services and to attract more clients via mobile phones next. Alibaba, for instance, invested in a professional soccer club, a film-production company, a mobile game creator and an online video company.
BeijingShiji Owns Travel Technology
Beijing Shiji is known for providing IT consulting to hotels in China. It offers an exhaustive range of services including softwarethat manage room reservations, purchasing, inventory, point of sales systems, broadband networks and billing systems.
It claims that 6,000 hotels in China use its products, which include 90% of the country's five-star hotels. Its patrons include the likes of Grant Hyatt Hotels and Marriott International Inc.
Other Stocks that Warrant a Look:
Stocks worth considering in this industry include Mercadolibre, Inc. (MELI), World Energy Solutions, Inc. (XWES), and PetMed Express, Inc. (PETS).
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