The Competition Commission of India (CCI) has approved MakeMyTrip’s acquisition of rival, ibibo Group, according to documents filed by Nasdaq-listed MakeMyTrip to US Securities and Exchange Commission on late Friday.
The document stated that “On January 20, 2017, ibibo Group Holdings (Singapore) Pte. Ltd. (ibibo Group) received a letter from the Competition Commission of India stating that the proposed combination of MakeMyTrip and ibibo Group has been approved by the Commission.” Closing of the transaction is expected to around 31 January 2017.
Announced in October 2016, online travel firm MakeMyTrip had agreed to buy Ibibo Group’s travel business in India in an all-stock deal, creating the country’s largest online travel firm worth $1.8 billion.
While, listed on US-based stock exchange, over 80% of MakeMyTrip’s business comes from India, according to its financial statements for fiscal 2015-16. The company registered Rs1,925 crore in revenue for year ended 31 March 2016, while ibibo group clocked revenues of Rs365 crore for the corresponding period, according to its filing with Registrar of Companies (RoC).
The deal will bring all brands of the Ibibo Group such as Goibibo, redBus, Ryde and Rightstay under MakeMyTrip. Together, Ibibo and MakeMyTrip processed 34.1 million transactions in 2015-16, MakeMyTrip had said in a statement in October.
“As separate entities until now, we had been competing with each other; but would now come together to further dominate this highly under-penetrated online Indian travel space. This market offers immense headroom to grow and provide value and delight to our customers.” said the founders of MakeMyTrip and ibibo Group in a congratulatory email to the employees on Friday.
“Our next and immediate step is to launch projects of integration in all the areas and ensure completion of the first wave in a period of 8 to 10 weeks.” they added.
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 deal will result in Ibibo’s owners, Naspers and Tencent with a 40% stake in the merged entity. Naspers owns a third of Tencent, its most valuable investment. Naspers and Tencent jointly held a 91% and 9% stake in Ibibo respectively. They will become the single largest shareholder in the company.
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.
China’s Ctrip, which in January committed to invest $180 million (about Rs1,200 crore) in MakeMyTrip through convertible bonds, will see those instruments being converted into equity and end up with a stake of around 10% in the merged entity, Mint had reported in October.