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MakeMyTrip to acquire rival Ibibo Group in biggest online travel deal in India

Currently reading: MakeMyTrip to acquire rival Ibibo Group in biggest online travel deal in India
India TV Business Desk, New Delhi [Updated:19 Oct 2016, 14:19:42]

In what is touted to be the biggest acquisition in India's online travel space, Makemytrip will acquire rival ibibo in a deal that may be valued at over Rs 12,000 crore.

South Africa’s Naspers and China’s Tencent Holdings are selling ibibo Group to MakeMyTrip in exchange for an issuance of new shares by MakeMyTrip, the company said in a statement. 

Upon closing of the transaction, MakeMyTrip will own 100 per cent of ibibo Group. Naspers and Tencent will become the single largest shareholder in MakeMyTrip, owning a 40 per cent stake and will contribute proportionate working capital upon closing, it added.

Congratulating the makemytrip and Goibibo teams for the merger, Aloke Bajpai, CEO & Co founder, ixigo said,the last 12 months had seen heavy discounting on the hotels segment as competition between these two OTAs had intensified. So, we expect less discounting and more sanity to prevail in hotel pricing and hence margin improvement for all travel players.

"Customers and suppliers will benefit from more integrated product offerings, but at the same concentration of market share may impact pricing negatively for both suppliers and customers," he added.

The merger will bring together all brands of both companies together, creating a bouquet of leading travel brands like MakeMyTrip, Rightstay and ibibo Group’s goibibo, redBus, Ryde and Rightstay. These brands together processed 34.1 million transactions during FY2016. 

Additionally, prior to closing, a USD 180 million, 5-year convertible notes issued by MakeMyTrip to Ctrip.com International Ltd in January 2016 will also be converted into common equity, resulting in Ctrip having an approximately 10 per cent stake in the combined entity, it added.

The transaction is expected to close by the end of December 2016 and is subject to approval by MakeMyTrip shareholders and regulatory approvals. 

Commenting on the development, MakeMyTrip Founder Deep Kalra said: “We expect this deal to create an even more scalable business with the expertise to transform the booking experience for Indian travellers. I am delighted to be leading such a strong team in our next chapter of high-growth in this dynamic industry.”

“India is a key market for Naspers and this deal reinforces our commitment to the country. ibibo and MakeMyTrip have built leading companies through their innovative use of technology to create exceptional experiences for people traveling throughout India and, increasingly, beyond,” Naspers CEO Bob van Dijk said.

Following the closing of the proposed transaction, MakeMyTrip Founder Deep Kalra will remain Group CEO and Executive Chairman of the company and Co-founder Rajesh Magow will continue to remain CEO India of MakeMyTrip, it added. 

Founder and CEO of ibibo Group, Ashish Kashyap, will join MakeMyTrip’s executive team as a Co-founder and President of the organisation, MakeMyTrip said. 

“Deep, Rajesh and I saw a great opportunity to join forces, and I am excited that this merger enables all of us to continue a great journey together as the leading travel group in India,” ibibo Group CEO Ashish Kashyap said.

According to a Morgan Stanley note, the combined entity is valued at $1.8 billion. 

While Morgan Stanley acted as the financial advisor to MakeMyTrip Goldman Sachs served as financial advisor to Ibibo and Naspers. 

MakeMyTrip shares rose more than 42% on NASDAQ in early trades on Tuesday, valuing the company at about $1.2 billion.

MakeMyTrip, Ibibo Group, equity deal- India Tv
The merger will create one of the largest online travel firms in India