Online travel firm MakeMyTrip will acquire rival ibibo in an equity deal that will create one of the leading travel groups in India.
1. The combined entity will bring together a consumer travel brands, including MakeMyTrip, Goibibo, redBus, Ryde, GoStays, Value+ and Rightstay, together under one group.
2. The deal will give an exit to Naspers and Tencent, through their joint holding in Ibibo (91 percent owned by Naspers and 9 percent owned by Tencent).
3. Both investors will get new shares issued by MakeMyTrip. Upon closure of the transaction, MakeMyTrip will own 100 percent of Ibibo Group.
4. The deal will also make arch rivals MakeMyTrip and Ibibo Group as partners to fight younger startups entering the space such as Softbank funded OyoRooms, and Bertelsmann funded Treebo in the budget hotel space. It will also give them ammo to fight Yatra, who will be relegated to a distant second now.
5. The deal will also provide investor play in Nasdaq. Naspers and Tencent will become the single largest shareholder in MakeMyTrip, owning a 40 percent stake, and will contribute proportionate working capital upon closing, which will provide MakeMyTrip with adequate funding to fight Tiger Global and Softbank which are also playing big in India’s OTA space.
6. Additionally, Ctrip which invested about USD 180 million in MakeMyTrip in January 2016, will end up holding 10 percent in the combined entity.
7. The deal will provide fillip to shareholders of Nasdaq listed MakeMyTrip. Stock of MMYT (Symbol) Nasdaq gained a whopping 43 percent after the announcement of the acquisition.
8. The deal makes the combined entity valued at USD 1.8 billion, as per Morgan Stanley. Marketcap of MMYT alone is about USD 1.23 billion, as per its last trade.
9. The Following the closing of the proposed transaction, Founder Deep Kalra will remain Group CEO and Executive Chairman of MakeMyTrip and Co-founder Rajesh Magow will continue to 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.
10. It will be the largest acquisition of MakeMyTrip since it was founded in 2000 and will ensure more cash infusion in the entity by the two big investors Naspers and Tencent in future.