MakeMyTrip And Ibibo Will Merge To Create The Biggest Company In Travel Booking Niche In India
Without any shred of doubt, this is indeed the biggest development in the Indian Online Travel Agency niche. The mega merger of MakeMyTrip and Ibibo will create the largest travel booking portal of the country. MakeMyTrip will acquire one of its biggest rivals, Ibibo in a deal estimated to be around $1.8 to $2.0 billion, although both companies have not confirmed the real value of the pact.
The financial advisors to the deal were Morgan Stanley for MakeMyTrip and Goldman Sachs for Ibibo. After the final documents of this deal are inked in December, all the brands associated with these two entities are expected to retain their identity. These include RedBus, Rightstay and Ryde which are all top brands in the travel space in India. While MakeMyTrip controls an estimated 30% share of online hotels and flights booking, Ibibo has a grip on approximately a fifth of hotel bookings.
Synergy Of The Merger
The combined entity including the respective brands of the two companies would have made a total of 34.1 million total transactions in 2015-16. Of these 9.7 million would have comprised of air transactions, 6.6 million hotel transactions and 17.5 million bus transactions. Reports state that 45 percent of the business of the companies is on mobile phones.
Naspers, a South Africa based technology enterprise, and Tencent, a Chinese investment firm, own 91 per cent and 9 per cent stake respectively in Ibibo Group. They will now sell their stake to MakeMyTrip and get 40% share in the combined company. Naspers is expected to own around 36 per cent in MakeMyTrip, making it the single largest shareholder of the country’s top OTA.
What The Future Holds
The new entity is expected to enjoy share of about 20 per cent of the Indian online flight bookings. Its market share in online hotel and bus bookings will be in single digit according to information released by the companies. The estimated online travel market in India is about $10 billion in terms of gross booking value.
The setup of the new organization will be as follows. The founder of MakeMyTrip will continue to function as group Chief executive and Executive Chairman. MakeMyTrip co-founder Rajesh Magow will continue to remain Chief Executive (India) of the new company. Ashish Kashyap, the Founder and Chief Executive of Ibibo Group, will be the Co-founder and President of the combined company.