On Tuesday, online travel portal MakeMyTrip (MMYT) announced it will acquire rival ibibo in an all-stock deal that BloombergQuint estimates to be worth $727 million.
While MakeMyTrip has not disclosed a total deal value, the travel portal said in a conference call, shortly after the announcement, that the closing price of the transaction was $21.45 per share. The media statement also disclosed that once the deal is done, ibibo's promoters, South Africa's Naspers and China's Tencent will hold, via a jointly owned holding company, 40 percent of the combined entity. This will make them the largest shareholder in the combined entity.
Currently, the U.S.-listed MMYT has 42.2 million equity shares. BloombergQuint calculates that it will issue approximately 33.9 million shares to ibibo's promoters.
Additionally, MMYT will issue 8.5 million shares to Ctrip. Earlier this year, China's largest online travel agency Ctrip had invested $180 million in MMYT via 5-year convertible notes.
Overall, MMYT will issue approximately 42.4 million new shares to Ctrip and ibibo promoters.
The deal will bring all brands of the Nasper and Tencent-backed Ibibo Group such as Goibibo, redBus, Ryde and Rightstay under MakeMyTrip.
The transaction, which is expected to be completed by the end of this year, is subject to approvals from MMYT shareholders and regulatory bodies.
MMYT said in its release that its balance sheet has enough strength to raise`more capital, if required, in the next one year.
Based on MMYT's filings with the SEC, the company's losses in FY16 widened to $88.5 million on a revenue of $336 million.
Composition Of The New Board
It's interesting to note that while this has been dubbed as MMYT's acquisition of ibibo, the composition of the board of the combined entity seems to belie that headline. Based on SEC filings, the board will have ten members, of which four will be nominated by Naspers and Tencent, one will be nominated by Ctrip, two will be nominated by the MMYT management, and three will be independent directors.
Management Rejig
After the deal is done, MMYT Founder Deep Kalra will remain the group's chief executive officer (CEO) and executive chairman while co-founder Rajesh Magow will continue to remain India CEO of MakeMyTrip. Ashish Kashya, the founder and CEO of the ibibo group will join MMYT's executive team as a co-founder and president of the organisation.
This is indeed a very momentous occasion and I think going forward this is going to redefine the way that travel is purchased in the country.Deep Kalra, Founder, MakeMyTrip
Also Read: Naspers to Merge India Travel Business With Rival MakeMyTrip
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