India’s largest online travel company, MakeMyTrip, has announced the acquisition of Ibibo, a rival online travel company, for $720 million in stocks. This makes the valuation of the merged company at $1.8 billion, the largest in its industry.
This will also bring all the subsidiary companies like GoIbibo, redBus, Rightstay and Ryde under MakeMyTrip. It will also allow the company to diversify and strengthen in domains it currently was not operating in. This transaction will be completed by the end of this year.
MakeMyTrip is arguably the leader in Online travel ticket booking space and while Ibibo too is in the same space, they have largest share in Bus tickets booking, thanks to their acquisition of redBus last year. Both the companies will be merged and will operate under MakeMyTrip banner.
The major owners of Ibibo, Naspers and Tencent, which own 91% and 9% respectively in ibibo Group, will sell the firm to MakeMyTrip in exchange for 40% stake in the combined company.
Ashish Kashyap, Founder and CEO of Ibibo will join MakeMyTrip’s executive team as a Co-Founder and President of MakeMyTrip. “The combination will bring together a bouquet of leading consumer travel brands, including MakeMyTrip, goibibo, redBus, Ryde and Rightstay, which together processed 34.1 million transactions during FY2016,” said the company.
This merger is expected to also create a better and crisper booking experience on MakeMyTrip’s website. redBus’ expertise will also help MakeMyTrip get into a new business, along with the tie-ups with Snapdeal.
Post the merger news, the Nasdaq listed MakeMyTrip shares shot up by over 44 percent, which meant investors are very optimistic of this development.
How will the company stack up against Yatra?
Yatra.com is a major rival to MakeMyTrip, and more so now because of this acquisition. The company has been known to launch exciting offers and innovative partnerships to garner customers.
Yatra has recently also launched experimental activities comprising of extreme adventure, events, ultra-luxury and romantic experiences, food trails and an exhaustive list of workshops for various hobbies and interests for everyone. Such initiatives make it more than just an online travel website.
Other smaller players like Cleartrip might not be a competition right now and because of this merger, the combined company should be able to take on the likes of these rivals.
