The online travel sector in India has witnessed formation of a leading travel group in India, with the recent announcement of MakeMyTrip-ibibo Group merger. According to Morgan Stanley, the combined entity values at US$ 1.8 billion. At the moment, Deep Kalra, founder of MakeMyTrip, will stay as group CEO and executive chairman, while Rajesh Magow, co-founder of MakeMyTrip, will remain as CEO for India market. On the other hand, Ashish Kashyap, who is the founder and CEO of ibibo Group, will become a part of the MakeMyTrip team under the designation of co-founder and president.
Indicating the gain from the transaction for the group, Kalra said, “This deal is expected to create an even more scalable business. I am delighted to be leading such a strong team.” Adding to that, Magow commented, “The combination will help provide an even stronger value proposition to our users.”
Whether there will be exits by employees is not yet clear, but expectations are that everyone will be absorbed in the new entity.
Ashish Kashyap, CEO, ibibo, stated that his company’s merger with MakeMyTrip will help both companies to continue a great journey together as the leading travel group in India. Stressing that co-existence is important in the travel industry, rather than cutting each others business, he added that its better to have multiple franchises rather than harming their profits.
Adding that the transaction volume for hotels in Ibibo at US$ 3.6 million for 2015-2016, Kashyap said that the deal would provide better value compensation to consumers. He indicated that the deal will be completed by the year end.
Naspers and Tencent have effected the 100 per cent sale of ibibo Group to MakeMyTrip and the later will issue new shares to them. Both these foreign firms have a jointly-owned holding company with Tencent share being just nine per cent. However, when the deal is done, Naspers and Tencent will emerge as the largest shareholding entity in MakeMyTrip with a 40 per cent stake.
The combined entity will bring together consumer travel brands including MakeMyTrip, goibibo, redBus, Ryde and Rightstay, which together processed 34.1 million transactions during this fiscal.
