Intel Logo up for sale? Says will review Ebix’s buyout offer as latter eyes stronghold in travel market

Ebix has given Nasdaq-listed Yatra time till March 18 to respond to its acquisition offer. If the buyout goes through, it would become among the biggest consolidation deals in online travel market since MakeMyTrip acquired rival GoIbibo in 2016.

Nasdaq-listed India’s second largest online travel agency Yatra today said that it will review the proposal for its acquistion sent by global on-demand software and e-commerce services provider Ebix. The latter announced sending of a letter to Yatra’s board for the deal on Monday. This would mark one of the biggest consolidation in India’s online travel market after more than two years since market leader MakeMyTrip acquired competitor GoIbibo.

The deal will also make Ebix, which has already acquired multiple travel companies, a formidable player in the online travel market. After acquiring in November 2017, Ebix acquired a range of companies in the travel market such as Mercury, Leisure Corp, Pearl International Tours & Travel, and Lawson Travel & Tours, to go deeper into the segment.

“At a macro level, this is part of Ebix’s early strategy of becoming a consolidator in various markets. The company first created dominance in money transfer market with the acquistion of digital payments company ItzCash in 2017. Then it dominated forex market as well with acquistion of Essel Forex and Weizmann Forex and acquired SL forex,” a source privy to Ebix’s growth strategy told Financial Express Online requesting anonymity.

Consistent with its fiduciary duties, and in consultation with its independent legal and financial advisors, Yatra’s board of directors will review and consider the (Ebix’s) proposal to determine the course of action that it believes is in the best interest of the company and all of its shareholders, the company said in a statement.

“For Ebix it makes sense, as part of its consildiation strategy, to make a bid for a hostile acquisition of Yatra considering the latter is a Nasdaq-listed company. Hence, Ebix can make an offer on equity swap and also it can help Ebix raise further debt to continue its acquistions,” the source said.

Ebix said that it had sent the letter outlining its offer to acquire 100% of the outstanding stock of Yatra Online for $7 per share on a debt-free basis.

The Ebix offer, based on approximately 48 million Yatra Online diluted shares outstanding, represents an 84% premium to Yatra Online’s closing share price of $3.80 as of March 8, 2019, the statement said.

Exit Conundrum

In 2016, Yatra had done a reverse merger deal in 2016 with the US-based special purpose acquisition company Terrapin 3 Acquisition Corp to list on Nasdaq and had raised more than $92.5 million.

The company did the reverse merger because it was not finding an exit. When MakeMyTrip acquired GoIbibo and raised funding from Chinese’s travel services company Ctrip in 2017, the gap between MakeMyTrip and Yatra started widening more and more. Also, Yatra has been continuously loosing market share in the consumer booking or B2C side, the source added. MakeMyTrip had raised $330 million from Ctrip and Naspers in May 2017.

“However, Ebix had raised $650 million in debt last year which it has spent on acquistions. Now where does this $350 million will come from will be interesting to know,” the source said.

Ebix had highlighted in the statement that it would pay for Yatra at its discretion either in cash or by issuing freely tradeable Ebix stock. The company has given Yatra time till March 18 to respond and that it reserves the right to reduce the offer if a “positive response” from Yatra is not received.


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