Ebix buyout offer too tempting for Yatra to ignore: Rivals

Even as Nasdaq-listed domestic online travel major Yatra Online ‘reviews’ a buyout offer from US software firm Ebix, experts—including rivals of Yatra—reckon that the deal is ‘too tempting’ for the Gurgaon-headquartered travel services company to ignore. The offer price of $336 million in a cash-and-stock deal boils down to $7 per share, which is a premium of 84 percent to Yatra’s close last Friday.

“I don’t think they have any reason to refuse the offer,” says one of the top officials of a rival online travel company, requesting anonymity. “It’s a premium nobody can give them even in the wildest dreams,” he adds, pointing out that how the company, over the past two years, has been transforming itself from B2C focused to one catering to the corporate world. Their chief executive, he says, highlighted in the company’s third quarter earnings call in January how corporate travel is becoming a ‘more exciting and larger opportunity’ for the company. 

A senior venture capitalist with stake in another rival OTA offers a pragmatic reason. “They [Yatra] don’t have deep pockets to play the cash-burn game that MakeMyTrip and Oyo have indulged in over the past couple of years,” he says, adding that Yatra lost on its early-mover advantage due to its inability to stay put in the bleeding-cash game.

While Yatra maintained that the ‘company’s board of directors will review and consider the proposal,’ a person close to the development stressed that the company is ‘seriously mulling’ the proposal. The company is faced with two options, he said, requesting anonymity. It’s an option between growing organically yet slowly, in the corporate business, which is at an inflection point in India; and being open to sell out to a larger player, which is already big in the corporate segment. Last August, Ebix had acquired two Indian companies in the travel space—Mumbai-based Mercury Travels and Delhi-headquartered Leisure Corporation— reportedly for $14.2 million. 

Atlanta-based Ebix, which makes software for the insurance, financial and healthcare industries, intends to merge Yatra Online with its Indian EbixCash subsidiary set-up, the company said in a press statement. "We believe that Yatra Online’s products and services are complementary to EbixCash’s travel portfolio of Via and Mercury,” Ebix Chairman, president and CEO Robin Raina, said in the release. A combination of the two companies, he added, would lend itself to significant synergies and the creation of the India’s largest and most profitable travel-services company.
 
Disclaimer: Network 18 has a minority stake in Yatra.