Online booking service Priceline Group Inc. has agreed to pay $500 million as part of a deal that would give it a stake of up to 10 percent in Chinese travel service provider Ctrip.com International Ltd.
The move comes as Priceline and Shanghai-based Ctrip broaden their working partnership, allowing Ctrip's customers to reach Priceline's portfolio of offerings, the companies said Wednesday.
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Priceline is investing in Ctrip through a $500 million convertible bond. Ctrip is also allowing Priceline to buy Ctrip shares in the open market over the next 12 months. Combined with the shares convertible under the bond, Priceline will be limited to holding up to 10 percent of Ctrip's outstanding shares.
But Priceline will have the right to appoint an observer to Ctrip's board of directors.
Under the terms of the deal, the two companies will offer their respective hotel inventory to each other on a broader scale, including an agreement to boost promotion.
Ctrip agreed to offer additional Priceline Group brand services to its customers, including inventory from rentalcars.com and OpenTable, and Priceline.
Shares of Priceline, which is based in Norwalk, Connecticut, gained $6.43 to $1,287 in aftermarket trading. The stock ended regular trading down 64 cents to $1,280.57.