Ebix Inc Chief Executive Robin Raina said that the Atlanta-headquartered company’s bid on Monday, to acquire Nasdaq-listed domestic online travel major Yatra Online, was “generous” one, with the potential deal likely to provide a “great outcome” to shareholders of both companies.
Speaking to ET over the phone, Raina, CEO of Ebix, which has a market capitalisation of $1,56 billion as of Monday, said that the software and services company had been looking at Yatra over the past one-and-half to two years.
“Anybody who is in travel will have to look at Yatra. Yatra is one of the formidable payers. They have a good brand equity, are the number one corporate player in the market. Their results have been up-and-down…. We have followed it very closely,” Raina said.
Founded in 2006 by Dhruv Shringi, Manish Amin and Sabina Chopra, Yatra counts a number of venture capital, private equity and strategic investors including, Reliance Industries, Norwest Venture Partners, Intel Capital, IDG Ventures and Vertex Venture Management, among its list of backers.
In 2016, it went public on Nasdaq, through the reverse merger, what is also termed as a back-door IPO, having signed an agreement with Nasdaq-listed special purpose acquisition company Terrapin 3 Acquisition Corp.
Yatra Online, Inc, confirmed that it received the proposal from Ebix and said its Board of Directors will review it.The Ebix offer of $7 per Yatra share represented a 84% premium over the latter’s closing stock price on Friday.
“If we can get $150 million revenue from Yatra annually,and can get 30% operating income out of it, which means $45 million of income out of it. From Ebix’s perspective, I’m going to look at it from what is the net for Ebix as a merged entity,” Raina said.
“As a merged entity it gives me $0.25-$0.30 cents of diluted EPS. It means its value for money for my shareholders. The way I look at it, if in the process Yatra shareholders get the value, I don’t mind that. I believe my shareholders will get that with $0.25-$0.30 accretion.”
Ebix’s offer to acquire Yatra for $336 million in a cash-and-stock deal is the latest acquisition bid by the Atlanta-based company, which has been on a buyout spree over the last 12-18 months, spending over $500 million, across segments, ranging from travel and transportation, to payment solutions and remittances.
Last year, in a conversation with ET, Raina had said that the company was also in the process of listing its India business, EbixCash, through which it has made all the acquisitions.
“We are planning an IPO, sometime in 2019, and after the general election,” Raina had said at the time. “When we go for an IPO, we would like to have a minimum of $400 million in net revenue, and I would like to go there with a minimum of 30% operating income.”
On Monday evening, Raina said that the decision to acquire Yatra was driven by Ebix’s bid to emerge as the leader in the country’s fast-expanding travel sector.
“We conduct approximately $2.5 billion GMV on our platforms… If we acquire Yatra, that $2.5 billion will jump to $4 billion, which would mean we would be the undisputed number one in India, and places us, in a very formidable way to attack international markets, which is a clear goal for us,” Raina said.
In August last year, Ebix India, the subsidiary of Atlanta-based Ebix group, acquired two companies in the travel space — Mumbai-based Mercury Travels and Delhi-based Leisure Corporation — for a cumulative amount of $14.2 million, with an aim to create a separate division to focus on the niche travel market in India.
India’s online travel market is anticipated to cross $13.5 billion by 2021, accounting for about 43% of the country’s total travel segment, according to a report by Praxis Global published last year.
“We believe that our offer is very compelling. We feel that for the Yatra Board not to accept it, would be possibly unfair to its own shareholders,” Raina said.
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