MakeMyTrip Limited and ibibo Group Announce Transaction to Consolidate their Indian Travel Businesses
Two leading travel groups in India, MakeMyTrip Limited (NASDAQ:MMYT) and ibibo Group (owned by global technology group Naspers Limited (JSE: NPN.SJ and LSE: NPSN)), have agreed to pursue a transaction that will combine the two businesses under MMYT, creating one of the leading travel groups in India that provides a one-stop shop for all Indian travellers and serves as a critical partner for travel industry suppliers.
The combination will bring together a bouquet of leading consumer travel brands, including MakeMyTrip, goibibo, redBus, Ryde and Rightstay, which together processed 34.1 mm transactions during FY2016.
The transaction is expected to unlock value for customers, supply partners and shareholders, by combining the complementary strengths of each business. MakeMyTrip brings its strong brand, robust mix of domestic and outbound hotels and packages business and strong position in the air ticketing business. ibibo Group, via its brand goibibo and redBus, comes with a strong presence in various fast growing travel segments including hotels, bus bookings and air ticketing.
Following the closing of the proposed transaction, Founder Deep Kalra will remain Group CEO and Executive Chairman of MakeMyTrip and Co-founder Rajesh Magow will continue to remain CEO India of MakeMyTrip. Founder and CEO of ibibo Group, Ashish Kashyap, will join MakeMyTrip’s executive team as a Co-founder and President of the organization.
Deep Kalra, Chairman and Group CEO of MakeMyTrip, 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.”
Rajesh Magow, co-founder and CEO India of MakeMyTrip added: “We welcome the ibibo team to the newly expanded MakeMyTrip family. The combination of these two enterprises, with their deep understanding of customer preferences, will help us provide an even stronger value proposition to our users and offer further career growth opportunities for all employees”
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.”
According to Bob van Dijk, CEO Naspers: “India is a key market for Naspers, and this deal reinforces our commitment to the country. ibibo and MakeMyTrip have built leading companies through their innovative use of technology to create exceptional experiences for people traveling throughout India and, increasingly, beyond. Today’s announcement underlines the continued ambition of Deep, Rajesh and Ashish and their teams, and I look forward to seeing the future success of this new and even stronger business.”
Naspers and Tencent, through their jointly owned holding company (91% owned by Naspers and 9% owned by Tencent), are selling ibibo Group to MakeMyTrip in exchange for an issuance of new shares by MakeMyTrip. Upon closing of the transaction, MakeMyTrip will own 100% of ibibo Group. Naspers and Tencent will become the single largest shareholder in MakeMyTrip, owning a 40% stake, and will contribute proportionate working capital upon closing.
Additionally, prior to closing , the US$180 million, 5-year convertible notes issued by MakeMyTrip Limited to Ctrip.com International, Ltd. (“Ctrip”) (NASDAQ: CTRP) in January 2016 will also be converted into common equity, resulting in Ctrip having an approximately 10% stake in the combined entity.
The transaction is expected to close by the end of December 2016 and is subject to approval by MakeMyTrip shareholders and regulatory approvals.
Morgan Stanley is acting as exclusive financial advisor to MakeMyTrip and has also provided a fairness opinion to the Board of MakeMyTrip. Latham and Watkins, S&R Associates and Appleby are acting as legal advisors to MakeMyTrip. Goldman Sachs is acting as exclusive financial advisor to ibibo and Naspers, while Cravath, Swaine & Moore, Trilegal and BLC Roberts are acting as legal advisors.