After a year of announcement, flight and hotel booking company Yatra has terminated its pending merger agreement with US-based software firm Ebix. The OTA also filed a litigation in the Court of Chancery of the state of Delaware seeking ‘substantial’ damages for Ebix’s alleged breach of contract.
Last year in July, Ebix was in reports of acquiring Yatra through a merger deal at an enterprise value of $337.8 million in an all-stock deal. However, according to a Reuters report, it seems Ebix has now backed out of the agreement.
The Gurugram-based company now holds Ebix accountable for breaches of its representations, warranties, and covenants in the merger agreement and seeks substantial damages.
Ebix was eyeing to strengthen its local travel play through the acquisition of Yatra. The termination of the deal has come at a time when travel and hospitality segments have seen no business in the past three months. Things are not going to change drastically and would take many months from here to regain the pre-COVID-19 scale.
Entrackr’s queries to Yatra and Ebix didn’t elicit any immediate response. We will update the post as and when they respond.
Many travel companies such as MakeMyTrip, TravelTriangle, Treebo, Oyo, and Fab Hotels had laid-off employees to extend the runway and preserve resources. MakeMyTrip had fired 350 staff while TravelTriangle let go of about 300 people. Oyo furloughed employees, whereas its peers Fab and Treebo also downsized workforce.
While the exact reason for Ebix backing out of the merger deals is not disclosed, the impact of the Covid-19 pandemic on the travel industry could be the likely reason.
Walking out of Ebix from the deal may trigger a can of problems for Yatra. Its business wasn’t in good shape, even in a pre-Covid-19 crisis. The move could enforce to downscale operations and team significantly. The company has already cut salaries of senior executives and said no to hikes in remuneration.