Global software integration platform that generally masters in the provision of on-demand softwares and e-commerce services to industries like finance, insurance, healthcare – Ebix, has offered Yatra.com a “generous” acquisition deal.
Yatra has confirmed that it is reviewing the offer with the help of Citi Group Global Markets Inc. as the financial advisor and Goodwin Procter LLP as legal advisors.
In this lengthy offer sent across by Ebix Inc., the US software company has set a $7 price for each outstanding diluted share of Yatra. Considering that there are 48 million shares in that category the deal is expected to be priced at $336 million.
However, this price is subjected to conditions that Yatra settles all its pending warrants before closing, else Ebix will pay the market price for the warrants and adjust it against the $7 price at which it purchases shares of Yatra.
The $7 price in itself is an 84 per cent premium on the currently prevailing market price of $3.8 (as on 8th March 2019).
Ebix also has the rights to reduce the offer if Yatra doesn’t respond positively and the due diligence doesn’t start by 18th March 2019.
The deal is going to be transacted via cash and stock. The stock of Ebix will be priced at a minimum of $59 and a maximum of the average stock price of the company based on 10 days before closing. The stocks, after 25 months, can also be resold to Ebix at 10 per cent discount on purchase price.
As of 11th March 2018, the market capitalisation of Ebix was 1.57 billion and the share price was at a high of $51.55.
Ebix evaluates the business on the cash flow and earning per share (EPS) metrics and provides a detailed rationale behind the offer. Firstly, it believes that post acquisition Yatra will generate $150 million net revenue for the company and within six months it would be generating a 30 per cent plus operating margin.
This company estimates will lead to a 25 to 30 cent increment in the EPS.
Further, the two companies together are slated to take each other to the position of market leaders in their combined domains. In its offer, Ebix claims that the merged entity will become India’s largest and most profitable end-to-end travel industry player in the insurance services industry.
Post-acquisition the platform will provide distribution, travel insurance, Forex, Visa services, MICE etc. all under one name revealed the company’s press statement.
Both the companies will ride on each other’s international outreach to procure that leadership status. Yatra Online will specifically be merged with EbixCash platform of Ebix based on the highest compatibility between the function of these two entities. EbixCash has a travel portfolio of Via and Money, and Yatra is one of the top-notch corporate travel solution providers in India.
With the deal, the company expects to take its GMV up from $2.5 billion to $4 billion, an undisputed top position in India.
The Robin Raina led company has been on an acquisition spree for a while. It closed deals with Mercury Travels and Leisure Corp last year to strengthen its foot in the travel market. It had been scrutinizing Yatra’s performance for two years before making the offer.
Yatra had made a back-door listing on NASDAQ by a reverse-merger agreement with US-based special purpose acquisition company Terrapin 3 Acquisition Corp.