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Wednesday, 19 October, 2016, 10 : 15 AM [IST]

MakeMyTrip, Ibibo merge to create mega online travel company

Two of India's biggest online travel agents, MakeMyTrip and Ibibo Group, are merging in an all-stock deal, as per a TOI news report. The alliance will create a mega entity that will control a fifth of the lucrative airline booking market and also have significant shares in the bus and hotel bookings, and ride-sharing spaces.

The merged entity will operate as MakeMyTrip and will make the going tough for rivals Cleartrip and Yatra. The deal size was not disclosed but the companies said South Africa's Naspers and China's Tencent, the joint owners of Ibibo Group, will become the single largest shareholder in MakeMyTrip, owning a 40% stake. MakeMyTrip's share price on the Nasdaq, where it is listed, soared by 44% soon after the deal was announced. Analysts estimate that Ibibo was valued at about $400-700 million.

MakeMyTrip has been the strongest player in the online airline ticketing space. Ibibo's core strength, too, is airline ticketing, but it has a particularly strong presence in online bus ticketing, following its acquisition of redBus in 2013. All the merged entity's brands together processed 34.1 million transactions in FY2016.

Deep Kalra, who founded MakeMyTrip in 2000 together with Rajesh Magow, said all the entities including MakeMyTrip, redBus and Goibibo — the Ibibo Group portal — will retain their individual identities and will play to their strengths. He said there is also scope for many synergies.

"MakeMyTrip is strong in the air-ticketing and branded 5-4-3 star hotel-booking space, while Goibibo is strong in the budget accommodation space. One of the strategies that could play out is: A lot of bus travellers that redBus has would prefer accommodation offered by our recently launched brand Rightstay that includes villas, cottages, bungalows and apartments. You will see a lot of such interesting synergies unfolding going forward," he said.

Kalra will remain the group CEO and Executive Chairman of MakeMyTrip and Magow will continue to remain CEO India. Ashish Kashyap, who founded Ibibo in 2007, will join MakeMyTrip's executive team as a Co-founder and President.

"With the combined entity having around 60% market share of the approximately 100,000 online daily hotel room nights sold in the country, the MakeMyTrip-Ibibo merger signals a big shift in the balance of power. Margin pressure will reduce significantly, allowing MakeMyTrip to invest in growing the overall market," the analyst said. (Source: TOI)
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