NEW YORK — Expedia sold its entire stake in eLong, a Chinese travel service, to a group of businesses based in China for roughly $671 million. The news sent shares of the online travel company up more than 5 percent in midday trading Friday.
Before the market opened, Bellevue-based Expedia said that it had sold its 62.4 percent share in eLong to a group that includes Ctrip.com International Ltd., Keystone Lodgings Holdings Ltd., Plateno Group Ltd. and Luxuriant Holdings Ltd. The company said the transaction closed Friday.
Separately, Shanghai-based Ctrip, said it had acquired a 37.6 percent stake in eLong for roughly $400 million.
Expedia’s ties to eLong date back to 2004, when its parent company, IAC/InteractiveCorp, bought 30 percent of the company. IAC spun off Expedia with eLong the next year, and Expedia later acquired a larger share of eLong in an attempt to profit from a growing appetite for travel in China.
But eLong eventually became a drag on Expedia’s profits. In a note to clients, Scott Devitt, an analyst at Stifel Nicolaus & Co., said eLong took a $33.3 million cut out of Expedia’s first-quarter adjusted earnings before expenses. He estimates the sale of eLong should boost Expedia’s adjusted earnings before expenses by $85 million this year.