MakeMyTrip & Goibibo mega merger deal: Important Facts

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According to reports, two of the biggest travel portals in this country have decided to become one. Online travel firm MakeMyTrip Ltd has agreed to buy its rival Ibibo Group’s travel business in India in an all-stock deal. 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.

Ibibo’s brands include goIbibo for hotels and air ticketing and redBus, the bus booking portal. Makemytrip controls an estimated 30% share of the market for online booking of hotels and flights. Ibibo’s controls about one-fifth of the hotel booking. 

Some of the important facts about the deal:

 

  • The deal will bring all brands of the Ibibo Group such as Goibibo, redBus, Ryde and Rightstay under MakeMyTrip. 
  • According to media reports, the group CEO and executive chairman of MakeMyTrip, Deep Kalra, has said that all the major portals, including MakeMyTrip, Goibibo, and redBus will operate as individual entities as they presently are, and will keep serving travellers in exactly the same way they do right now.
  • Although neither company would indicate the value of the combined entity, people familiar with the transaction estimated it at about $1.8-$2 billion.
  • With this merger, Naspers and Tencent which jointly held a 91% and 9% stake in Ibibo respectively will become the single largest shareholder in the company byselling Ibibo to MakeMyTrip.
  • MakeMyTrip founder Deep Kalra will remain group chief executive and executive chairman of MakeMyTrip Group and co-founder Rajesh Magow will remain chief executive of MakeMyTrip’s India business. Founder and chief executive of Ibibo Group, Ashish Kashyap, will join MakeMyTrip’s executive team as a co-founder and president of the organization.
  • The merged entity will have 10 directors. Naspers (and Tencent) will nominate four, Ctrip one, and MakeMyTrip’s promoters two. The other three will be independent directors.
  • In a highly underpenetrated and fragmented market, the merged entity can truly become a one-stop-shop for all Indian travellers. 
  • The deal will also make arch rivals partners to fight younger startups like Cleartrip, Booking.com and Expedia in the rapidly growing Indian travel market. 
  • The deal signals impending consolidation in the country’s highly competitive consumer internet sector.

 

 

According to Kalra, the idea is to focus on getting people to move from offline booking to online booking, "since online travel penetration remains fairly low at about 15% for the accommodation industry and 18% for organized bus industry in India." 

 

The final transaction is expected to close by the end of December this year, after which Makemytrip will own 100% of ibibo.