Two of India's biggest online-focused travel groups, MakeMyTrip and Ibibo Group, are merging 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.
The merged entity will operate as MakeMyTrip. 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.
The merged entity will make the going tough for rivals Cleartrip and Yatra. 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 FY 2016.
Deep Kalra, who founded MakeMyTrip in 2000 with Ramesh 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.
Less than a year ago, it looked like MakeMyTrip and Ibibo were preparing for a big battle with each other. In January , the former had raised $180 million from Ctrip, one of China's largest online travel companies. A month later, Ibibo raised $250 million from Naspers and Tencent. But clearly , the two realized at some point that it was a battle that neither might win.