Ebix Paying $338 Million for Indian Travel Booking Company Yatra

Brendan Byrne - July 17, 2019

Atlanta-based software company Ebix Inc. (NASDAQ: EBIX) is acquiring Yatra Online (NASDAQ: YTRA) for $337.8 million in an all-stock transaction.  The main prize for Ebix is Yatra Online Pvt. Ltd., a subsidiary of Yatra Online and leading corporate travel exchange in India.

The companies announced during the first quarter that they were considering merging.  On March 11, Ebix put an offer on the table of $336 million, or $7 per share on a debt-free basis, representing an 84% premium to the price of YTRA stock at that time (although it didn’t account for debt).

The new agreement is a little more complex than just a share swap.  In connection with the merger, each ordinary share of YTRA will be entitled to receive 0.005 shares of a new class of preferred stock of Ebix. Each share of Ebix convertible preferred stock received for each Yatra ordinary share will, in turn, be convertible into 20 shares of common stock of Ebix.  When all the smoke clears and indebtedness and other factors are accounted for, the deal works out to $4.90 per YTRA share and the enterprise value of $337.8 million.

The combined company is expected to be the largest travel services firm in India with 11,000 employees worldwide.  The new company is figured to be bona fide competition to MakeMyTrip, currently the travel services stalwart in the country.

The companies will be battling for share in a rapidly growing travel market in India expected to reach $85 billion by 2022, with nearly half of that coming from internet platforms.

Yatra provides a bevy of travel-related services, including domestic and international air ticketing, bus and rail ticketing, hotel bookings, tours, holiday packages and more.  The company has more than 800 corporate clients, including the likes of Sony Pictures, Deloitte, Huawei and PWC amongst others, and provides real-time bookings for more than 100,000 hotels in India and over 1,000,000 hotels around the world.

Once the transaction is completed, Yatra will continue to operate under its own brand and join Via and Mumbai-based Mercury Travels as part of Ebix’s Indian EbixCash travel portfolio.

India remains a key market for Ebix.  The Yatra acquisition will put its investment in the country at approximately $1 billion after buying stakes in other travel-related companies and prepaid cash provider Itz Cash.

Ebix plans to bring EbixCash public via IPO in the second quarter of 2020 and this buyout may add some extra appeal to the offering.  “The synergies and the cross-selling opportunities can create tremendous economic value for the shareholders, once the IPO is done,” management said in a news release this morning.

During the latest quarter reported, ended December 31, 2018, Yatra Online reported $33.5 million in adjusted revenue, up 16.6% from the year prior quarter.  Adjusted EBITDA was negative $2.2 million for the quarter.

As the trading day winds to a close, shares of EBIX have fallen 6.9% to $44.79.  Shares of YTRA are up 13.3% at $4.39.

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Brendan Byrne

While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. You may contact Brendan via his email ([email protected]) or his Google+ page (https://plus.google.com/u/0/116608759701551457422).

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