Wednesday, September 06, 2006

Are Hutch and Pricline still friends?

News out that Hong Kong gazillionaire Li Ka-shing's companies Hutch Whampoa and Cheung Kong have sold 70% of their stake in Priceline. Priceline's stock has bucked the Expedia and Travelocity trend of declining share prices with its stock up 60% from a year ago. Analysts have been talking up Priceline particularly over its continued gains in hotel sales. It might be that Li is just cashing in on this increase in stock price. Reports are he will retain rights to board spot and therefore the control and influence element remains.

BUT - what does this mean for the Hutch and Priceline Asian joint venture? Priceline Asia (Hong Kong, Singapore and Taiwan) is a joint venture which (was in the past at least) dominated in ownership by Hutch. It has been active since 2001 but have struggled to attracted Asian buyers to the Name Your Own Price model even with enormous offline cross promotion in the early days from Hutch Whampoa such as in its Watsons stores across Hong Kong. Aparantly the savings were never quite enough to convince locals to make opaque purchases. Is this sale by Li/Hutch a first step toward an end to this relationship and venture in Asia? One more thing for us to keep an eye on.

UPDATE - not surpisingly the market did not like the sale very much and punished the stock with a 9% drop.

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