MakeMyTrip and Ibibo: Will the merged entity be a threat to Cleartrip, Yatra?

India Infoline News Service | Mumbai | October 19, 2016 13:48 IST

Two of India's biggest online-focused travel groups are merging in an all-stock deal to create a mega online travel company.

MakeMyTrip and Ibibo Group are coming together in an alliance. Two of India's biggest online-focused travel groups are merging in an all-stock deal to create a mega online travel company, says a TOI report.

A mega entity that will control a fifth of the lucrative airline booking market will be created by the alliance. It will also have significant shares in the bus and hotel bookings, and ride-sharing spaces, as per the report.

The merged entity, which will operate as MakeMyTrip is going to give tough competition to rivals Cleartrip and Yatra, said the report.

The joint owners of Ibibo Group, Naspers and Tencent, will become the single largest shareholder in MakeMyTrip, owning a 40% stake, as per the companies. However, deal size is yet to be unveiled, the report said.

Nasdaq witnessed MakeMyTrip's share price rising by 44% post the announcement of the deal. Ibibo was valued at about $400-700 million, as estimated by analysts, stated the report.

While MakeMyTrip holds a robust presence in online airline ticketing space, Ibibo, post its acquisition of redBus in 2013, has a stronger presence in online bus ticketing, despite holding reasonable strength in airline ticketing as well, added the report.

"We congratulate Deep, Rajesh and the team at makemytrip and Ashish and team at Goibibo for making this happen. This is definitely a landmark moment for the Indian online travel industry, since it will result in the combined entity becoming a sizeable juggernaut in the OTA space. The last 12 months had seen heavy discounting on the hotels segment as competition between these two OTAs had intensified. So, we expect less discounting and more sanity to prevail in hotel pricing and hence margin improvement for all travel players. Also, this will cause rationalization in marketing spends and hence a lower cost of customer acquisition for other online travel players.

Customers and suppliers will benefit from more integrated product offerings, but at the same concentration of market share may impact pricing negatively for both suppliers and customers. The narrative in the online travel space will change from discounting to innovation in 2017, and we at ixigo feel we are well positioned to take advantage of that given our deep focus on product, technology, aggregation, personalization and AI", said Aloke Bajpai, CEO & Co-Founder, ixigo.


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