Ebix’s $337.8 Million Acquisition Of Yatra: Details About The Deal You Should Know About

By Annie Baker ● July 22, 2019
  • Atlanta-based software company Ebix announced recently that it acquired Yatra for $337.8 million. These are the details behind the deal

Ebix — an Atlanta-based software company — announced recently that it is acquiring India-based travel booking service Yatra in a deal valued at $337.8 million.

After the deal is closed, Yatra is going to become part of Ebix’s EbixCash (the Indian subsidiary of the company) travel portfolio. Ebix’s EbixCash portfolio includes Via and Mercury.

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Yatra went public about three years ago following a reverse-merger with Terrapin 3 Acquisition Corporation, according to TechCrunch. Yatra reported $31.7 million in Q4 2018 revenue and it now has over 800 corporate clients.

In connection with the merger, each ordinary share of Yatra will be entitled to receive 0.005 shares of a new class of preferred stock of Ebix. And each share of Ebix Convertible Preferred Stock received for each Yatra Ordinary Share will be convertible into 20 shares of common stock of Ebix.

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Based on the trailing 15-day volume-weighted average price of Ebix Common Stock of $49.05 per share, each Yatra Ordinary Share convertible into Ebix Common Stock would be valued on an as-converted basis, at $4.90 per share — which represents an approximately 32% premium to Yatra’s closing share price on March 8, 2019, (the last trading day prior to the public announcement of Ebix’s offer to acquire Yatra).

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And assuming a value of $4.90 per Yatra Ordinary Share, the transaction implies an enterprise value of $337.8 million at the Ebix collar price of $59 per share and post adjustment for Indebtedness, Working capital, Warrants to be converted and minimum cash requirement, a net equity value of $239 million. Ebix will be issuing 243,747 convertible preferred stock, which will be convertible into 4,874,931 shares of Ebix common stock.

“The acquisition of Yatra would lend itself to significant synergies and the emergence of EbixCash as India’s largest and most profitable travel services company, besides being the largest enterprise financial exchange in the country. Over the last few months, we have evolved a detailed synergistic plan, that once fully executed can provide between 40 to 75 cents of accretion to the Ebix non-GAAP EPS. We are excited by the cross-selling opportunities that this combination provides us, while further strengthening our future EbixCash IPO offering,” said Ebix Chairman, President, and CEO Robin Raina.

EbixCash has more than 9,000 employees and the division reported an operating income of $41.5 million in Q4 2018 with a profit of $8.5 million. Under Ebix’s travel platform, the combined company will utilize Yatra’s large and loyal existing customer base, comprehensive service offering and multi-channel platform to take advantage of the dynamic and growing multibillion-dollar opportunity in India.

The combined company will have an international footprint with more than 11,000 employees and a travel expanse spanning GCC, ASEAN and Asia Pacific countries. And the transaction also provides the necessary scale to extend its travel business to North America, Latin America, and Europe. The transaction is expected to be 40 to 75 cents accretive to Ebix’s non-GAAP earnings per share within a period of 6 to 12 months from closing once all the mutual synergies have been executed.

Ebix is known for developing software solutions for insurance, financial, e-commerce, e-learning, healthcare, and travel industries. And the company has over 110,000 distribution outlets and amassed over 8,000 corporate clients. And Ebix is planning to have EbixCash go public by the second quarter of next year.

Some of the other Indian companies that Ebix has ownership in include an 80% controlling stake in on-demand SaaS travel company Zillious and stakes in remittance company Weizmann, online cab company AHA Taxis, B2B marketplace company Routier, e-learning company Smartclass, and travel company Centrum Direct. Plus Ebix acquired controlling stake in Itz Cash in 2017. And it also owns assets in Pearl International Tour & Travels and Lawson Travels & Tours. Plus Ebix owns about three-quarters of the market share of foreign exchange sales at 32 international airports in India (conducting over $4.8 billion in gross transaction value per year).

“We are pleased to announce this agreement with Ebix, which provides our shareholders with the opportunity to participate in the significant upside potential of one of the fastest growing multinational On-Demand software and E-commerce services companies in the world,” added Dhruv Shringi — co-founder and CEO of Yatra Online. “Over the last several years, we have built Yatra into one of India’s most well-recognized e-commerce brands, growing into the leading corporate travel services provider and one of the largest consumer travel companies. Becoming a part of Ebix’s EbixCash travel portfolio will enable us to continue on that path. As part of a larger diversified organization with the necessary scale and resources to be a leader in today’s dynamic travel marketplace, we will provide more options and an enhanced experience for our joint customers and will be an even stronger partner to the airline, hotel, car rental and other businesses we work with. We are confident that combining Yatra’s loyal customer base, comprehensive service offering and multi-channel platform with Ebix’s complementary Via and Mercury businesses, will create a leading online travel platform and India’s largest corporate travel platform that will capture growth opportunities and deliver enhanced value to shareholders.”

In terms of competition, Yatra competes against MakeMyTrip — which is currently the market leader. What fueled MakeMyTrip’s growth recently is the acquisition of Ibibo in 2016. And MakeMyTrip raised $330 million from Naspers and Ctrip about a year later. Now China-based Ctrip owns about 49% of MakeMyTrip.

As a condition to the closing of the transaction, Yatra will offer newly issued Yatra Ordinary Shares in exchange for 50% of the outstanding warrants to purchase Yatra Ordinary Shares. It is anticipated that approximately 1.3 million newly issued Yatra Ordinary Shares will be exchanged for 50% of the outstanding Yatra Warrants, representing an exchange ratio of 0.075 newly issued Yatra Shares per Yatra Warrant. And assuming the value of the underlying Ebix Common Stock to be received for each Yatra share is $4.90, the value offered per Yatra Warrant would be $0.37.

The Ebix Convertible Preferred Stock will offer all Yatra shareholders the right to have redeemed, for a cash price of $5.31, the shares of Ebix Convertible Preferred Stock received per Yatra Ordinary Share. And the redemption option will be available to Yatra shareholders during the 25th month after closing. The redemption option is only available to Yatra shareholders who have not opted to convert the Ebix convertible preferred stock into common stock of Ebix before the 25th month after closing.

Manish Hemrajani — the VP of Corporate Development and Investor Relations at Yatra — pointed out that the transaction has been approved unanimously by the board of directors at each of the companies. And the deal is expected to close by Q4 2019 subject to closing conditions.

Bass, Berry & Sims PLC is acting as legal counsel to Ebix. And Citi is acting as exclusive financial advisor to Yatra and Goodwin Procter LLP is acting as legal counsel.