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US court dismiss Yatra Online's claims for damages from Ebix for breach of merger contract

The Court of Chancery in its latest order said that Yatra's claims of damages from Ebix were not substantially justified.

August 31, 2021 / 11:04 AM IST
Representative image

Representative image

A Court in the US on August 30 dismissed all claims by the online travel agency and travel search engine, Yatra Online Inc against US-Based software firm Ebix Inc, a court order seen by Moneycontrol said.

Yatra Online had last year announced that it was terminating its pending $337.8 million merger agreement with Ebix over the alleged violation of agreement terms.

The Indian company had even sued Ebix and had sought substantial damages for the alleged breach of the agreement.

The Court of Chancery of The State Of Delaware in its latest order said that Yatra's claims of damages from Ebix were not substantially justified.

Yatra Online in its lawsuit had claimed that Ebix made extra-contractual promises that it was willing to renegotiate the merger agreement’s terms when, in fact, it had no intent to close on the renegotiated terms

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Furthermore, the online booking platform claimed that Ebix also caused it to be unable to go forward with its Rights issue as its stocks price had fallen following Ebix declaring the termination of its merger agreement and leaking the information to the stock exchanges.

Yatra.com is listed on NASDAQ, and its stock price fall 53 percent between January 2020 and June 2020.

Ebix had signed an agreement to acquire Yatra Online, the parent company of Yatra.com, for an enterprise value of $337.8 million in July 2019.

Ebix in a statement last year had also said that it intends to enforce all of its rights under the Merger Agreement, and is currently considering all options, including a countersuit against Yatra on account of multiple breaches of its representations, warranties, and covenants under the Merger Agreement.

The termination of the merger between Ebix and Yatra was also seen as bad news for future deals in the sector, which has been hit badly by the Covid-19 pandemic, analysts said.

The merger also hit Yatra.com first-quarter earnings in 2020-21 as it paid $2.2 million in legal fees which dragged its adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization down even more at a time when the travel industry was already struggling due to the outbreak of the COVID-19 pandemic.

Yatra.com reported an adjusted EBITDA loss of $4.1 million for the April-June quarter in 2020-21, the losses were nearly double of what it posted last year in the same quarter in 2019-20 at $2.7 million.
Moneycontrol News
first published: Aug 31, 2021 11:04 am
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