Two of the biggest names in the Indian travel industry, MakeMyTrip Limited and ibibo Group, have decided to go through a transaction that will merge their businesses into one entity under MMYT where Makemytrip is buying ibibo India’s travel business reportedly for $720 million, and giving birth to one of the largest travel groups in India.
The merger will see some of the leading consumer travel brands coming under one roof. This includes, MakeMyTrip, goibibo, Rightstay, redBus, and Ryde, which together processed a whopping 34.1 mm in transactions during financial last financial year.
The transaction will prove to be extremely beneficial to shareholders, supply partners and customers as it would bring together the complementary strengths of each of the businesses. While on one hand, MakeMyTrip brings in a robust mix of domestic and outbound hotels and packages business, a strong hold in the business of air ticketing and most importantly, a strong brand.
The deal will bring all brands of the Nasper and Tenbcent-backed Ibibo Group such as Goibibo, redBus, Ryde and Rightstay under MakeMyTrip. Together, Ibibo and MakeMyTrip processed 34.1 million transactions in 2015-16, the latter said in a statement.
According to a Morgan Stanley note, the combined entity is valued at $1.8 billion.
With the closure of the deal, MakeMyTrip founder Deep Kalra will continue his role as the Group CEO and Executive Chairman of MakeMyTrip and Co-founder Rajesh Magow will also hold his position of CEO India of MakeMyTrip. Ashish Kashyap, Founder and CEO of ibibo, Group, will join in the MakeMyTrip family as a Co-founder and President of the organization.
Talking about the transaction, MakeMyTrip’s Chairman and Group CEO Deep Kalra, said, “Today’s announcement is a significant step forward for the rapidly growing travel industry in India. 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.”
Providing his take on the merger, Ashish Kashyap, CEO ibibo Group, said: “Since I founded ibibo in 2007, we have innovated and grown to become one of the leading travel companies in India, providing solutions not just for travellers, but for suppliers too. 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.”
Naspers and Tencent, through their jointly owned holding company, are selling the ibibo Group to MakeMyTrip in exchange for an issuance of new shares by MakeMyTrip. When the transaction closes, MakeMyTrip will have 100 percent ownership of the ibibo Group.
With a 40% stake, Naspers and Tencent will end up becoming the single largest shareholder in MakeMyTrip. They will also contribute proportionate working capital upon closing of the transaction.
Further, before the transaction closes, the MakeMyTrip Limited issued US$180 million, 5-year convertible notes to Ctrip.com International, Ltd. (“Ctrip”) in January 2016 will also have to be converted into common equity. This would result in Ctrip having an approximately 10% stake in the combined company.
The transaction, which is being hailed as the biggest consolidation in India’s online travel agency business, is expected to close by the end of this year and is subject to approval by MakeMyTrip shareholders and regulatory approvals.