India's leading travel portal MakeMyTrip is all set to completely acquire Naspers-backed ibibo group, signalling a major consolidation in the online travel aggregation space.
The companies did not disclose the deal size, but sources and industry experts pegged it at $400-$450 million, making it the biggest acquisition in this space.
Ibibo, in which South African investment firm Naspers and Chinese Internet giant Tencent hold 90 per cent stake, had acquired online bus aggregator RedBus for about $110 million in 2014.
The acquisition creates a one-stop shop for Indian travellers, as it brings together leading consumer travel brands, including MakeMyTrip, goibibo, redBus, Ryde and Rightstay.
The transaction is expected to close by the December end, and is subject to approval by MakeMyTrip shareholders and regulators since it is listed on Nasdaq.
Naspers and Tencent are selling their stake in ibibo Group to MakeMyTrip in exchange for an issuance of new shares. With the acquisition, MakeMyTrip will own 100 per cent of ibibo Group while Naspers and Tencent will together own about 40 per cent in MakeMyTrip, and will contribute proportionate working capital for the acquisition.
Besides, China’s leading OTA company Ctrip, which invested about $180 million in MakeMyTrip early this year, will also be used for the acquisition. Ctrip will have a 10 per cent stake in the combined entity.
Deep Kalra, founder of MMT, will remain Group CEO and Executive Chairman of the new entity, while ibibo Group founder Ashish Kashyap will join MakeMyTrip's executive team as a Co-founder and President.
Kalra said the announcement “is a significant step... for the... travel industry in India. We expect this to create an even more scalable business with the expertise to transform the booking experience for travellers..”
Experts reckon the combined entity will command over 50 per cent in the OTA space, which has other players like Yatra and ClearTrip.
Experts feel the OTA space has become cluttered, with everyone burning up cash in deals and offers, and incurring huge losses.