In a deal that went off the rail, Yatra Online – the country’s online travel booking company – has pulled out of the merger agreement with US software firm Ebix. The travel portal has also filed litigation against Ebix for breach of agreement terms and is seeking damages. Ebix is also considering all options, including a counter-suit against Yatra. According to Yatra, Ebix breached its representations, warranties and covenants in the merger agreement and an ancillary extension agreement. The transaction would have created India’s largest and most profitable travel services company.
To save the deal, Yatra Online in May had filed to the US Securities and Exchange Commission that both the parties have agreed to extend the date to reach mutual agreement on an amendment of certain terms of the Merger Agreement to June 4. However, that did not happen and the deal failed. In a separate statement, Yatra had underlined that as of June 4, 2020, the company has over Rs 240 crore in total available liquidity. The company’s current monthly operating fixed cost is around Rs 8 crore.
The termination of the deal does not bode well for future deals in the sector, especially as the Covid-19 pandemic has hit the travel industry hard and cash-flows have been affected. Though internal disputes could be one of the reasons for the failure of the deal, the impact of Covid-19 could longer than anticipated as people across the globe will keep on hold their travel plans, and airlines and hotels will have to wait for months to get back to the pre-Covid level consumer demand. The travel and tourism industry will have to devise new strategies to revive business as it will take a longer time for the industry to revive.
The derailed deal
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