MakeMyTrip Limited (NASDAQ: MMYT) is an India-based online travel company that offers consumers various travel and leisure related products and services, saw its stock halted shortly after Tuesday’s market close.
Stocks are typically halted ahead of a major news announcement that could notably move a stock in either direction. Fortunately for MakeMyTrip’s shareholders, the news announcement was encouraging and helped boost shares higher by more than 50 percent.
MakeMyTrip announced in a press release that it has agreed to a transaction with ibibo Group, another India-based travel and leisure company, which will see the two companies combine and create one of the country’s largest travel groups.
The business combination will create a leading one-stop shop platform for consumers and serve as a critical partner for travel industry suppliers. In fact, the two companies through their various brands including MakeMyTrip, gobibibo, redBus, Ryde and Rightstay, combined for nearly 35 percent of all travel transactions during fiscal 2016.
MakeMyTrip’s strong brand, mix of domestic and international hotels and packages and strong positioning in the ticketing business will be complemented with ibibo’s positioning in hotels, bus bookings and air ticketing.
As part of the agreement, a previously existing five-year convertible note issued by MakeMyTrip to China-based Ctrip.com International (NASDAQ: CTRP) will be converted into common equity and the Chinese travel giant will now own around 10 percent of the combined entity.
Deep Kalra, Chairman and Group CEO of MakeMyTrip, said: “Today’s announcement is a significant step forward for the rapidly growing travel industry in India. We expect this deal to create an even more scalable business with the expertise to transform the booking experience for Indian travellers. I am delighted to be leading such a strong team in our next chapter of high-growth in this dynamic industry.”
Ashish Kashyap, CEO ibibo Group, said: “Since I founded ibibo in 2007, we have innovated and grown to become one of the leading travel companies in India, providing solutions not just for travellers, but for suppliers too. Deep, Rajesh and I saw a great opportunity to join forces, and I am excited that this merger enables all of us to continue a great journey together as the leading travel group in India.”