NASDAQ-listed Online Travel Portal MakeMyTrip Limited (MMYT) and Ibibo group which run online portals like Goibibo and Redbus have announced the merger of their business is the biggest unification move in the online travel agency (OTA) business in India. This merger will combine both companies under MMYT. Ibibo Group is co-owned by South African firm Naspers Ltd and China’s Tencent.
The merger comes a little over three months after rival Yatra agreed to be acquired by Nasdaq-listed special purpose acquisition firm Terrapin 3 Acquisition Corp in a reverse merger deal, with an enterprise value of USD 218 million. It also comes eight months after Naspers invested USD 250 million in Gurgaon-based Ibibo Group.
The merger will strengthen MakeMyTrip’s position in the OTA business and pump up competition against portals like Yatra.com, Cleartrip, Booking.com and Expedia.
MakeMyTrip’s 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.”
The consolidation will bring together a bouquet of consumer travel brands, including MakeMyTrip, goibibo, redBus, Ryde and Rightstay. The deal is expected to close by the end of December 2016 and is subject to approvals of MakeMyTrip’s shareholders and regulatory.
South African Naspers Ltd and China’s Tencent, through their jointly owned holding company (91% owned by Naspers and 9% owned by Tencent), are selling ibibo Group to MakeMyTrip in exchange for an issuance of new shares by MakeMyTrip. Upon closing of the deal, MakeMyTrip will own 100% of ibibo Group. Naspers and Tencent will become the single largest shareholder in MakeMyTrip, owning a 40% stake. Additionally, prior to closing, the USD180 million, 5-year convertible notes issued by the MakeMyTrip Limited to Ctrip.com International, Ltd. (“Ctrip”) in January 2016 will also be converted into common equity, resulting in Ctrip having an approximately 10% stake in the whole entity.
As part of the agreement, Founder-Deep Kalra will remain Group CEO and Executive Chairman of MakeMyTrip and Co-founder Rajesh Magow will remain CEO India of MakeMyTrip. Founder and CEO of ibibo Group, Ashish Kashyap, will join MakeMyTrip’s executive team as a Co-founder and President of the organization.
The combined entity will bring together a bouquet of leading consumer online travel brands, including MakeMyTrip, goibibo, redBus, Ryde and Rightstay, which all together processed 34.1 million transactions during fiscal year 2016.