MakeMyTrip Investors Rewarded Following News Indian Travel Assets Will Be Combined With Ibibo
India is one of the most rapidly growing economies in the world. As a result, air travelling has also been increasing, taking advantage of the weak global oil price over the last year or so. Therefore, it should come as little surprise that MakeMyTrip Limited (NASDAQ: MMYT) has decided to acquire Ibibo Group to expand its market share in the travel industry.
Following the news, MakeMyTrip surged nearly 50 percent to hit a 52-week high.
Details Of The Deal
Naspers Ltd., a south Africa tech group, and China-based Tencent Holdings Ltd. (OTC: TCEHY), are the owners of Ibibo, which manages brands like redBus and goibibo in India. These brands would be added to MakeMyTrip, Ryde and Rightstay brands. In the current fiscal year, these brands have managed to process 34.1 million transactions.
The integration of the two firms means that the merged entity would be a leading travel group, thus offering a one-stop shop for every Indian traveler. Similarly, the merged entity would become a key partner for suppliers of travel industry. The transaction is expected to close before the current year ends.
There is also another gainer in the transaction, which is Ctrip.Com International Ltd (ADR) (NASDAQ: CTRP). The company invested $180 million in MakeMyTrip's five-year convertible notes last January. This would be converted into equity, making Ctrip's stake in the merged entity about 10 percent.
MakeMyTrip chairman and group CEO, Deep Kalra, commented, "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."
Once the transaction is closed, Tencent and Naspers would be the single biggest shareholder in MakeMyTrip, with 40 percent stake. They would also contribute to working capital after the transaction is closed.
At last check, MakeMyTrip traded at $30, up 47.06 percent. Ctrip.com was last seen trading up 2.25 percent at $47.33.
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