Yatra acquires ATB to take on MakeMyTrip-Goibibo

#DigitalErra
Jul 25, 2017 · 3 min read

Yatra Online Inc, India’s second-largest online travel operator, has acquired corporate travel services provider Air Travel Bureau (ATB) in an estimated cash-and debt deal of $22.5–27.5 million, the Nasdaq-listed company announced on Monday.

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The boards of both companies have approved the acquisition, but the terms of the deal have not been disclosed. A statement from Yatra says it has agreed to assume ATB’s debt, and acquire all its shares.

Yatra said that “The first Closing to acquire majority of the outstanding shares is expected to occur by mid-August, 2017 and the second Closing is expected to occur in Q2 of the 2018 calendar year, subject to other customary closing conditions.”

According to the company statement, ATB is India’s largest independent corporate travel services provider with gross bookings of Rs 1,500 crore, generated through a client base of over 400 large and medium-sized businesses spread across the country.

Yatra co-Founder and CEO Dhruv Shringi said that as a combined entity, “We are now the largest corporate travel services platform in India by Gross Bookings.”

For ATB, they’ll also get access to Yatra’s aggregation of hotels, which they can offer to their clients, according to ATB CEO Sunil Narain. In addition, they’ll get Yatra’s technology.

Yatra’s M&A activity

Last year, a special purpose acquisition firm Terrapin 3 Acquisition Corp. had acquired Yatra in a multi-phased transaction that valued the Indian online travel agency firm at an enterprise value of $218 million.

In January 2016, Yatra.com had also acqui-hired Mumbai-based Travel-logs, which specialises in organising customised city walks and private tours, for an undisclosed amount.

The acquisition of ATB helps Yatra strengthen its position in the more reliable corporate travel business vertical, even as it tries to create a space in a market dominated by the combined entity of MakeMyTrip-Goibibo. Earlier in March, fair trade regulator CCI approved the proposed merger of Makemytrip’s Indian travel business with the rival Ibibo Group, owned by South African media conglomerate Naspers.

Company Earnings

For the ended March 31, 2017, Yatra posted revenue of Rs 939.35 crore, up 12.1% over fiscal 2016. Losses, however, more than trebled to Rs 593.69 crore, or Rs 237.89 per diluted share, over the same period, driven by a combination of personnel, sales and marketing expenses.

Revenue from its air ticketing business increased by 27.1% to Rs 365.7 crore, while sales from the lucrative hotels and packages segment saw a more marginal uptick, coming in at Rs 531.47 crore in fiscal 2017.

The company’s cash and cash equivalents and term deposits stood at Rs 456.05 crore at the end of March 31, compared to Rs 141.46 crore at the end of the previous fiscal.

Online Travel Booking Industry

A recent Google India-BCG report has projected the overall Indian travel market to reach $48 Billion by 2020 at a CAGR of 11%-11.5%. Also, according to IBEF, the online travel market alone is expected to account for around 40%-50% of the total transactions by 2020.

Key Predictions for Indian Online Travel Market 2020 say:

  • Air travel will reach $30 Billion by 2020 growing at 15%. It continues to be the dominating category. It will be closely followed by hotels ($13 Billion) and railways ($5 Billion).
  • With the increase in smartphone penetration and digital payments usage, India’s online hotel market will grow to $4 Billion with 31% penetration at a CAGR of 25%.
  • By 2020, one in three hotel rooms will be booked online — a clear indicator of the growing importance of digital in travel research, planning, and booking.

According to all projections for 2020 of the Google India-BCG report, the online travel industry has a multi-billion-dollar scope.These deals mark the importance of sharing technological capabilities to understand customer journeys, thereby offering personalized travel solutions.

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