Online Travel Company MakeMyTrip Ltd has planned to buy Ibibo Group’s travel business in India in all-stock deal, making itself the country’s largest online travel company according to a statement by Morgan Stanely, is worth$1.8billion. The deal hasn’t announced yet but the sources reveal that the Ibibo’s owners, Naspers and Tencent, end up with a 40% stake in the merged entity; translate into a transaction worth $720million. Naspers own a third of Tencent, its most valuable investment.
All the brands will run under one roof of MMT
Naspers and Tencent jointly held a 91percent and 9 percent stake in Ibibo accordingly. They are going to single the largest shareholder in the company. On the other hand, China’s Ctrip, which in January committed to invest $180million in MakeMyTrip through exchangeable bonds, will now see how those instruments being converted into equity and end up with a stake of around 10% in the merged entity.
The other benefit of this deal is to bring all the brands of Ibibo Group such as Goibibo, redBus, Ryde and Rightstay under a single company that is MakeMyTrip. Together both companies processed 34.1 million transactions in 2015-16, said Morgan. MakeMyTrip share rose more than 42% on Nasdaq in early trades on Tuesday, valuing the company at about $1.2billion.
Kalra will remain CEO and Magow Chief executive
It is worth mentioning here that MakeMyTrip founder Deepa Kalra remain group chief executive chairman of the company and co-founder Rajesh Magow will remain chief executive of MakeMyTrip’s India business. Besides that Founder of Chief executive fo Ibibo Group, Ashish Kashyap will join “MMT” executive as co-founder and president of the organization, he added.
MMT shares will go to 9 directors
We are expecting from this deal to create and even more expansible business with the expertise to transform the booking experience for Indian customers or traveler”, said Kalra. He further added that the merged entity would retain and work through all brands, including Ibibo and MakeMyTrip. The transaction is likely to close by the end of December. The merged entity will have 9 directors. Nasper and Tancent will nominate four, Ctrip one, MMT promoters two and the other will be the independent directors.