In a fresh twist, online travel aggregator Yatra, on Friday (June 4), announced that it was cancelling the ongoing agreement with US software firm Ebix Inc, according to a report by Reuters.
Yatra has filed a plea seeking ‘substantial’ damages for Ebix’s alleged breach of deal terms. In 2019, Ebix had agreed to buy Yatra at an enterprise value of $337.8 Mn.
The deal, if concluded, would have given Ebix and an upper hand in the OTA segment as the company already owns Mumbai-based Mercury Travels and Delhi-based Leisure Corp. However, Yatra has now alleged that Ebix has breached the terms of their merger agreement. This includes breaching of clauses on representations and covenants.
Yatra said that it has implemented certain cost-saving measures starting April. Some of the measures include salary cuts by half and freezing salary hikes to weather the impact of the Covid-19 pandemic on its business.
The companies had said the merger would accelerate their growth potential and create the world’s leading end-to-end enterprise financial and insurance services provider. They were also planning to create India’s largest financial and travel Ebix Cash exchange.
Gurugram-headquartered Yatra was founded in August 2006 by Sabina Chopra, Manish Amin and Dhruv Shringi. It provides a full range of travel-related services such as domestic and international air ticketing, hotel booking, homestays, holiday packages, bus ticketing, rail ticketing, activities, attractions and ancillary services.
Yatra is backed by IDG Ventures, Vertex Venture Management, Norwest Venture Partners and other investors. The company had raised $15.4 Mn as venture debt from InnoVen Capital in September 2017.
Yatra has also made a string of acquisitions geared towards growth and expansion. These include Travelguru, Travel-Logs, WhatsApp-based concierge app Dudegenie and Bengaluru-based auto-rickshaw aggregator MGaadi. In July 2016, Yatra signed a reverse merger agreement with NASDAQ-listed firm Terrapin 3 Acquisition Corp (TRTL).
In the online travel segment, Yatra’s biggest competition are the likes of MakeMyTrip, Ixigo, TravelTriangle, YuMiGo, HolidayIQ, ClearTrip, Expedia, Ebix-acquired Via.com, Hotels.com and Booking.com.
Currently, most of the online travel aggregators are facing severe losses due to the Covid-19 lockdown which had put a ban on all travel and tourism activities for around two months.
The share prices of listed OTAs, including Yatra, have dropped massively which has led to a drop in the valuation of many companies. However, the industry is slowly reviving as the government has now restarted domestic flight and train booking on OTAs. Meanwhile, the opening up of hotels from June 8 will also help OTAs to make a comeback.