There's an Internet rumor this morning that Chinese messaging and e-commerce giant Tencent will make a major investment in or buy travel operator Ctrip.com (CTRP). The rumor has the shares of Ctrip up sharply in premarket trading and close to 52-week highs.
The rumor comes a day after new Alibaba Group CEO Jonathan Lu gave an interview in the Wall Street Journal in which he said that the Group could go public at any time, and also that the Group would look to make acquisitions in the Chinese Internet space with its newly public stock currency.
If Alibaba is going to be a buyer of Internet assets, that is going to have a knock-on effect on Alibaba's direct competitors, like Tencent and Baidu (BIDU). Tencent and Baidu will feel increased pressure to buy assets that Alibaba might buy in the future. The advantage that Tencent and Baidu have over Alibaba, though, is they're already public.
Alibaba is not waiting for its initial public offering to make moves. It invested in Sina (SINA) and AutoNavi (AMAP) earlier this year. But being public will make it easier for Alibaba to move faster.
Travel is a key Internet vertical that you would expect big Internet players to look at. Baidu already owns Chinese travel site Qunar. Ctrip is the next biggest public travel company. Another possible travel acquisition candidate is eLong. Other key Internet verticals to watch in the future for possible acquisitions are online video, search, instant messaging, gaming, local, and social networking.
It should be a busy end of the year for Chinese Internet merger & acquisitions bankers.