Ebix, a supplier of on-demand software and e-commerce services to the insurance, financial, healthcare and e-learning industries, announced on Wednesday that it has entered into a definitive agreement with Yatra Online to acquire the latter through a merger. Yatra Online Inc is the parent company of Yatra Online, which is based in Gurgaon and is a corporate travel services provider with over 700 corporate customers.
Under the terms of the merger, each ordinary share of Yatra will be entitled to receive 0.005 shares of a new class of preferred stock of Ebix (Ebix convertible preferred stock). Each share of Ebix convertible preferred stock received for each Yatra ordinary share will, in turn, be convertible into 20 shares of common stock of Ebix.
A joint statement by the companies indicated that based on the trailing 15-day volume weighted average price (VWAP) of Ebix common stock of $49.05 per share, each Yatra ordinary share convertible into Ebix common stock would be valued at $4.90 per share.
“Assuming a value of $4.90 per Yatra ordinary share, the transaction implies an enterprise value of $337.80 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,” the statement said.
Ebix will be issuing 2,43,747 convertible preferred stock, which, in turn, will be convertible into 48,74,931 shares of Ebix common stock.
Following the completion of the transaction, Yatra will become part of Ebix’s EbixCash travel portfolio alongside Via and Mercury and will continue to serve customers under the Yatra brand.
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. “The transaction also provides the necessary scale to extend its travel business to North America, Latin America and Europe. Together, Ebix and Yatra will be a comprehensive global platform with “on-the-ground” presence in major markets worldwide,” the firms indicated.
From an earnings per share point of view, 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 indicated it intends to make Yatra an integral part of the EbixCash financial and travel exchange portfolio, while targeting an EbixCash initial public offering (IPO) in the second quarter of 2020.
Ebix chairman, president and CEO Robin Raina said 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. “We are excited by the cross-selling opportunities that this combination provides us, while further strengthening our future EbixCash IPO offering,” he said.
In March this year, Ebix had sent a letter to the board of Yatra Online, outlining its offer to acquire 100% of the outstanding stock of the firm.