The merger dispute between Yatra Online, Inc. and US-headquartered software firm Ebix Inc. may escalate after the latter threatened to file a countersuit against the India travel portal.
Late last Friday, Yatra (listed on the Nasdaq, like Ebix) terminated a pending merger agreement with the Atlanta-based software firm and filed a lawsuit seeking “substantial damages” over alleged breach of deal terms.
Late on Monday, the software firm said, “Ebix strongly disagrees with the allegations set forth in the (Yatra) complaint. Ebix intends to enforce all of its rights under the merger agreement, and is currently considering all options, including a countersuit, against Yatra, on account of multiple breaches of the merger agreement.”
Yatra terminated the agreement a little less than a year after the software firm agreed to acquire the Indian online travel services company in a cash-and-stock deal.
Neither parties attributed the dispute to the Covid-19 situation.
However, the volume of mergers and acquisitions (M&As) for Indian corporates has declined to the lowest level in eight years in the January-March quarter, which saw the lockdown coming into force towards the end, with firms stepping back from deals and hitting the pause button.
Ebix had offered to acquire Yatra at an enterprise value of $336 million (around Rs 2,350 crore then) and a net equity value of $239 million to boost its portfolio of Indian travel ventures. Ebix had in October 2017 acquired online-to-offline travel agency Via for $75 million.
The proposed deal with Yatra, which was to close on or before April 12, 2020, got stretched. The deadline was first extended to April 27 followed by an extension to April 30. A third extension was signed on May 1 to consummate the deal by May 4.
This was again extended to June 4 to provide the parties with time to determine whether they can reach a mutual agreement on an amendment of certain terms of the merger agreement. The final deadline lapsed earlier last week and led Yatra to end the deal.
Atlanta-based Ebix offers software and provides e-commerce services for the insurance, financial, healthcare industries. Its unit EbixCash had acquired Mumbai-based Mercury Travels and Delhi-based Leisure Corp. last year with an aim to create a travel division focused on luxury, events and sports-related travellers.
Yatra was founded in 2006 by former Ebookers Group (UK) executives Dhruv Shringi, Manish Amin and Sabina Chopra. It is India's second-largest online travel services company behind MakeMyTrip.
Yatra attracted funding from various investors including Network 18 (now part of Reliance Industries), Reliance Capital (Reliance Group), Norwest Venture Partners, Intel Capital, Chiratae (formerly IDG Ventures) and Temasek’s VC arm Vertex.
Yatra operates in India through Gurugram-based unit Yatra Online Pvt. Ltd.
Through a separate announcement late on Friday, Yatra assured its shareholders and stakeholders of sufficient strategic and financial resources required in the ongoing pandemic situation to continue its strategy to consolidate the corporate travel services sector in India.
Yatra has been one of the top online travel agencies (OTAs) in India for several years in a market dominated by MakeMyTrip. The market has seen consolidation in the past including acquisition of Travelguru by Yatra, GoIbibo by MakeMyTrip and Via by Ebix.
In July 2016, Yatra had signed a reverse-merger agreement with US-based special purpose acquisition company Terrapin 3 Acquisition Corp, which was listed on the Nasdaq, paving the way for a back-door listing of the second Indian online travel services provider in the US after MakeMyTrip.
Yatra has lost over four-fifth of its value since it went public and is currently valued at just $68.4 million after seeing its share price jump 17% on Thursday. Yatra’s share price cracked by two-thirds since it announced a plan to merge with Ebix last July.