US software firm Ebix has offered USD 336 million to buy Indian online travel services company Yatra Online in a cash-and-stock deal. Yatra’s shares went up on Monday after release of Ebix’s statement.
Atlanta-headquartered Ebix wants to bring its Indian arm EbixCash and Yatra Online on one platform. This deal could become the gateway for Ebix to be an end-to-end enterprise financial and insurance services player.
Ebix has given Yatra a week’s time to begin due diligence. If the company doesn’t get a positive response from Yatra, it might reduce the offer that represents an 84% premium to Yatra Online's closing price of USD 3.80 as of March 8.
Yatra is reportedly reviewing the offer. “Consistent with its fiduciary duties, and in consultation with its independent legal and financial advisors, the company’s Board of Directors will review and consider the proposal to determine the course of action that it believes is in the best interest of the company and all of its shareholders.," Yatra said in a statement. According to its statement the shareholders do not need to take any action at this time.
If Yatra accepts the offer, Ebix said the merged entity would become one of India’s largest and most profitable end-to-end travel industry players in the insurance services industry. The new entity would provide services such as distribution, travel insurance, forex, visa services, among other things.
Robin Raina, CEO of Ebix, said, “We see substantial synergies, economies of scale and expanded growth potential for the combined business. Our interest in making an offer for Yatra Online is also borne out of our firm belief that a combination of the two companies could be substantially and immediately accretive to Ebix’s EPS.”
Raina said Yatra Online’s products and services are complementary to EbixCash’s travel portfolio of Mercury and Via.
Via was acquired by EbixCash for USD 75 million in November 2017, and last year it bought Mumbai-based Mercury Travels and Delhi-based Leisure Corp to create a travel division focused on luxury, events and sports related travellers.
Yatra’s main competition in India is from MakeMyTrip and GoIbibo, whose USD 1.8 billion-worth merger in 2016 was one of the biggest consolidation in the Online Travel Agency (OTA) segment in country.
In November last year, Yatra reportedly laid off 270 employees in an attempt to outsource non-core operations such as relationship sales and post sales to third-party agencies.