MakeMyTrip- IBIBO deal and how it all happened

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In one of the biggest travel sector deal, MakeMyTrip has agreed to buy out rival ibibo Group to create the biggest player in the fast-growing flight, hotel and bus bookings market in the country.

Neither of the company have indicates the value of the combined entity, it is estimated at $1.8 billion.

The deal will put Goibibo, Redbus, Ryde, Rightstay and MakeMyTrip under one umbrella.

With this merger, Naspers and Tencent – which jointly owned the holding company – will get new shares by MMT. South Africa-based Naspers Ltd is the majority owner of ibibo, with a 91 percent stake, with the rest being owned by China’s Tencent Holdings.

In the new entity, Naspers and Tencent will own 40 percent share whereas China’s biggest online travel service provider Ctrip.com International Ltd will have 10 percent stake.

Although Deep Kalra, Founder of MakeMyTrip, was interested in IBIBO for past sometime, however, the service tax case in around January brought Kalra and Ibibo’s co-founder Ashish Kashyap together. Their cause was same. Both were fighting against the Director General of Central Excise Intelligence that had forced the online travel firms to pay service tax. The two firms won the case in the Delhi high court in September.

MMT has been facing increased competition in its hotels booking business from established Indian companies such as Cox & Kings, Thomas Cook and OYO Rooms.

The company had missed profit estimates for the last seven quarters partly due to higher marketing costs.

The acquisition will help reduce competition and therefore profit will go upward.