US-based software firm Ebix has made an offer to acquire Yatra.com for $336 million in order to expand its presence in the fast growing Indian travel market.
Ebix, which in recent months made a slew of acquisitions in the leisure and corporate travel segment, submitted its bid to the board of Nasdaq-listed Yatra Online outlining its offer.
Ebix offered to pay $7 per share to acquire 100 per cent of outstanding stock of Yatra Online and the offer price constituted 84 per cent premium to its closing price of $3.80 as on March 8. Ebix intends to merge Yatra Online into its Indian EbixCash subsidiary, it said.
Yatra.com was founded by Dhruv Shringi, Manish Amin and Sabina Chopra in 2006 and counted Reliance Capital and Norwest Venture Partners as its early investors. It listed on Nasdaq following a reverse merger with Terrapin in 2016. But low margins and high marketing spends in the highly competitive travel space in India led to losses and cash flow issues.
Recently, Yatra.com acquired a Chennai-based corporate travel services firm PL Worldways to boost presence in the segment and also decided to outsource non-core activities.
But profits have eluded the firm (it made Rs 13.7 crore profit in December-end quarter 2018) and sources say the management has been on the lookout for investors for the past few months. Yatra.com did not immediately react to the offer.
Ebix’s offer is subject to due diligence and customary regulatory and other closing conditions, it said.
The offer contemplates the assumption of all Yatra Online receivables, cash and restricted cash worth at least $25 million at the time of closing and other assets, with all liabilities being paid for by Yatra Online concurrent to the closing of the transaction.
Ebix said it would pay for Yatra Online either in cash or by issuing freely-tradeable Ebix stock. Ebix also said it may reduce the offer it if does not receive positive response from Yatra’s board and also reserves the right to withdraw the offer if it is not allowed to proceed with due diligence by March 18.
In recent months, Ebix has been on a buying spree in the travel and foreign exchange space within India. In January, it acquired 80 per cent stake in travel technology player Zillious Solutions and earlier bought 75 per cent stake in Weizmann Forex. Last year, it bought Mercury Travels, a firm co-owned by Oberoi group executive chairman PRS Oberoi and travel industry veteran Ashwini Kakkar.
Ebix Chairman, President and Chief Executive Officer Robin Raina said, “We believe that Yatra Online’s products and services are complementary to EbixCash’s travel portfolio of Via and Mercury, and a combination of the two would lend itself to significant synergies and the creation of the India’s largest and most profitable travel services company. We see substantial synergies, economies of scale and expanded growth potential for the combined business.”
Ebix believes that Yatra Online can generate revenues of over $150 million per year with 30 per cent plus operating margins on a post-closing basis, within six months of the acquisition.
Deal sheet
- Ebix intends to merge Yatra Online in its Indian EbixCash subsidiary
- Would pay for deal either in cash or by issuing freely-tradeable Ebix stock
- Might reduce offer price if there’s no positive response from Yatra board
- May even withdraw offer if not allowed to proceed with due diligence by March
Ebix’s buying spree in travel space
- Bought 80% in Zillious Solutions
- Took 75% in Weizmann Forex
- Acquired Mercury Travels