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MakeMyTrip to buy Ibibo’s India arm to create one of the largest travel companies in the country

Quartz india
Quartz india

MakeMyTrip, India’s homegrown Expedia, could create the country’s largest travel company with its upcoming acquisition.

The online travel agency is buying the India arm of Ibibo Group, co-owned by South African media conglomerate Naspers and Chinese internet company Tencent. The acquisition will create a massive company worth $1.8 billion, according to a note by Morgan Stanley, Mint reported.

All of Ibibo’s concierge brands will come under MakeMyTrip’s umbrella: GoIbibo, redBus, Ryde and Rightstay. Together, Ibibo’s sites and MakeMyTrip processed over 34 million transactions from 2015 to 2016, the companies said in a statement. At the start of 2016, Morgan Stanley—MakeMyTrip’s financial advisor for this deal—ranked GoIbibo the top hotel and flight search platform in the country, based on factors like higher booking volumes, confirmed bookings, and last-minute bookings.

According to media reports, the value of the deal was pegged at $720 million (Rs4,800 crore). By 2020, India’s online travel market is estimated to become the third-largest globally, Alok Bajpai, CEO of Ixigo, an internet travel firm wrote in the Economic Times newspaper in Dec. 2015. Currently apart from MakeMyTrip, the major players in India include Cleartrip, Ixigo, and Travelguru.

MakeMyTrip’s stock was halted in morning trading ahead of the impending announcement about the deal. On resuming trading, shares popped over 50%.

After the transaction is complete, MakeMyTrip co-founders Deep Kalra and Rajesh Magow will continue to hold their respective posts as group chief executive officer and CEO, India. Ashish Kashyap, who founded the Ibibo Group in Jan. 2007, will join MakeMyTrip’s executive team as a co-founder and president.

“We expect this deal to create an even more scalable business with the expertise to transform the booking experience for Indian travellers,” Kalra, who established his Gurgaon-based company back in 2000, said in the press release.

Naspers and Tencent are selling Ibibo in an all-stock deal, making them the single largest shareholder in MakeMyTrip, with a 40% stake. Chinese online travel planner CTrip.com, which decided to invest $180 million in the Indian travel site in Jan. 2016, will end up with a 10% stake in the combined entity once the deal goes through. The transaction is estimated to close around end of December 2016.

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