MakeMyTrip, India’s oldest travel website operator, has agreed to buy out rival ibibo Group to create the biggest player in the fast-growing flight, hotel and bus bookings market in the country.

The deal is probably the biggest in the online travel sector and one of the biggest in the Indian e-commerce sector in the recent times.

South Africa-based Naspers Ltd is the majority owner of ibibo, with a 91 percent stake, with the rest being owned by China’s Tencent Holdings.

unnamed

The details of the deal :

The all-stock deal values the combined company at $1.5 billion, according to a source familiar with the deal. The deal will add popular online ticketing websites such as, goibibo.com and redbus.com, to MakeMyTrip’s portfolio, which owns the flagship brand and the alternate accommodation site Rightstay.

Analysts see the value of the deal at $720 million. Nasdaq-listed MakeMyTrip had a market capitalisation of about $861.3 million as of Monday’s close. The shares on rose as much as 56.4 percent to $31.90 on Tuesday, hitting a more than two-year high.

Also Read :  BJP MP Varun Gandhi And Senior Military Officers Spilled Sensitive Info About Defence Deals For Foreign Prostitutes

MakeMyTrip founder Deep Kalra will continue to be the executive chairman and chief executive of the new company. Morgan Stanley advised MakeMyTrip on the deal, while Goldman Sachs was the adviser to ibibo and Naspers.

MakeMyTrip said on Tuesday that the ibibo deal would help “unlock meaningful synergies”.

Today‚Äôs announcement is a significant step forward for the rapidly growing travel industry in India… There are three well established brands, each a leader in their space that we value. These include MakeMyTrip, GoIbibo and RedBus and on the internet it is very important that you keep brands that add value and grow them and we are quite clear we would want to play to the advantage of each of these brands. If you look around the world, you will see keeping established brands have helped.

Makemytrip Group CEO Deep Kalra

Makemytrip Group CEO Deep Kalra
Makemytrip Group CEO Deep Kalra

According to Medianama, the combined entity (with MakeMyTrip, goibibo, redBus, Ryde and Rightstay under its umbrella) would have made 34.1 million total transactions in 2015-16, 9.7 million air transactions, 6.6 million hotel transactions and 17.5 million bus transactions. Of the transactions, 45 percent are on mobile, said the report.

Also Read :  Adityanath slams opposition for pandemonium in assembly

The combined company will command a market share of about 20 percent of the Indian online flight bookings, MakeMyTrip said on a call with analysts on Tuesday.

Reuters report citing an analyst said the online travel market in India is estimated to be about $10 billion in terms of gross booking value.

How will it impact customers :

According to Bajpai, customers and suppliers will benefit from more integrated product offerings, but at the same concentration of market share may impact pricing negatively for both suppliers and customers.

“The customers may feel the pinch as the discounts may lessen though they may not be done away with completely. Suppliers may be affected as commissions would become higher,” he said, adding the narrative in the online travel space will change from discounting to innovation in 2017.

Now You Can Get the Latest Buzz On Your Phone! Download the PagalParrot Mobile App For Android and IOS