Merger of Makemytrip and Ibibo, the new entity valued at $1.8 billion

When it comes to traveling two names that first come into the mind of an Indian consumer are GoIbibo and MakeMyTrip.

MakeMyTrip started in the year 2000 to cater the travel needs of the overseas travel community. After the success of IRCTC in the Indian market, MakeMyTrip started its operations in India is the year 2005. The Ibibo group started as a Social Networking site and with the acquisition of Redbus in the year 2006 entered into the travel market. After which GoIbibo was launched in the year 2007. These two rival giants have announced their merger on October 18, 2016. This deal involves Goibibo, Makemytrip, Redbus, Ryde, and Rightstay. The value of the deal wasn’t announced. Following the merger announcement, the stock price of MakeMyTrip soared up to $29.

These two companies will have to get approval from the Competition Commission of India (CCI). Approval from the Govt. Of India is expected to take up to 30 days and even more, if they have any other queries. After the merger, MakemyTrip will own 100% of the Ibibo group and Naspers and Tencent will own 40% of the new entity. Founder of the MakeMyTrip Deep Kalra will be the group CEO while the Goibibo founder Ashish Kashyap will serve as the president of the entity. The deal is expected to be closed by the end of this year (2016).

Some of the market experts think that the merger had happened because of the cash burn from each company to compete in the Indian market.

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When asked about combining the brands, Deep Karla said that the brands will not be combined as each of them has been performing well in their own aspect. So this merger will not affect the goCash and the MakeMyTrip cash. Users who have earned cash back on these websites can use them as usual.

This deal is not going to affect the consumer in any aspect. RedBus which has been performing well in the Bus ticketing industry will continue to do so, MakeMyTrip which has a very strong customer base in the Aviation sector, 3-5 star hotels, and the holiday trip booking will continue to improve on the same. GoIbibo which has done very well in the budget hotel segment will continue to do the same. The new entity will carve a new plan to improve the brand value of each of the brand and will focus on the people who book their tickets offline. This will enrich the customer base of the new entity.

As a common man, we can expect a reduction in the advertising spending and thus we can expect little lower fares than before. Even if the company doesn’t cut its spending on advertising, as there are no significant changes in the operating costs we can expect similar prices as in the past.

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