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Ebix offers to buy India’s largest corporate travel exchange

Ebix, Inc. today announced that it has sent a letter to the Board of Yatra Online, Inc., outlining its offer to acquire 100% of the outstanding stock of Yatra Online for $7 per share on a debt-free basis. Yatra Online, Inc is the parent company of Yatra Online Pvt. Ltd. which is based in Gurugram, India and is India’s leading Corporate Travel services provider with over 800 Corporate customers and one of India’s leading online travel companies and operates the website Ebix intends to merge Yatra Online in its Indian EbixCash subsidiary set up. Ebix’s offer is subject to due diligence and customary regulatory and other closing conditions.

The Ebix offer, based on approximately 48 million Yatra Online diluted shares outstanding, represents an 84% premium to Yatra Online’s closing share price of $3.80 as of March 8, 2019. Yatra Online stock has traded between $3.70 to $8.16 in the last 12 months. The offer contemplates the assumption of all Yatra Online receivables, cash and restricted cash worth at least $25 million at the time of closing and other assets, with all liabilities being paid for by Yatra Online concurrent to the closing of the transaction. The Ebix Offer expects any outstanding warrants to be surrendered or bought and retired before closing by Yatra Online; failing which Ebix would pay for the prevailing market price of the warrants at the time of closing, while adjusting its overall $7 share price payable to Yatra Online shareholders downwards at the time of closing, by the quantum of money paid by Ebix for retiring those warrants.

Ebix would pay for Yatra Online at its discretion either in cash or by issuing freely tradeable Ebix stock. In case Ebix decides to pay for the acquisition in Ebix stock, then the Ebix stock will carry a minimum collar value of $59 per Ebix share, calculated by dividing the total acquisition price payable to Yatra shareholders by the 10-day average price of the Ebix stock, preceding the closing date. Ebix stock will be converted at a minimum value of $59 in case the 10-day average price of the Ebix stock, preceding the closing date is less than $59.

Also, in that case Ebix will offer all Yatra shareholders a downside cover on the Ebix stock issued by allowing them to sell Ebix stock back to Ebix in the 25th month after closing, at the discretion of each Yatra Online shareholder, at a fixed price that would be 10% lower than the price at which Ebix stock is issued to them. For example, if Ebix stock is issued to Yatra Online shareholders at say a price of $60 (assuming that it is the 10-day average price in the market), then they will be able to sell the stock back to Ebix, if they wish to do so, in the 25th month from closing, at a fixed price of $54.

Ebix also announced that it reserves the right to reduce its offer at its discretion if it does not receive a positive engagement response from the Yatra Online Board in a timely manner or if any subsequent steps are taken by the Company that could have an adverse impact on its future value. Lastly, Ebix reserves the right to withdraw this offer, if the Yatra Board of Directors declines to allow Ebix to proceed with due diligence by 5:00pm EST on 18th March 2019.

Transaction Rationale:

Highly Accretive: Ebix’s model is to integrate acquired products, services and companies in a highly disciplined and efficient manner, with resulting cash flow and earnings per share being key endpoint metrics. Ebix believes that Yatra Online can generate revenues upwards of $150 million per year with 30%+ operating margins on a post-closing basis, within 6 months of the acquisition by Ebix. Ebix expects that the combination of the two companies can generate between 25 to 30 cents accretion for the shareholders of the combined Ebix company.

Ebix has the unique distinction of being named in the Fortune magazine’s 100 fastest growing companies list five times in the last decade. Ebix also has an history of producing 18 years of sequential growth in terms of top line and bottom line both. Under the present management, Ebix stock has shown shareholder return of more than 16,000% growth in terms of stock value.

Domain Experience: Through our extensive portfolio of products and services, we have developed a deep understanding of the insurance, finance, travel and technology ecosystems. We have thousands of clients in 50+ countries with a client base encompassing millions of users, across the world including India. Collectively, the Ebix management brings in a few hundred years of experience across all sectors of the travel industry, providing strong historical knowledge and excellent working relationships with all key travel and financial industry constituents.

Vision to create the World’s largest End-to-End Enterprise Financial and insurance Services Player: The merged entity would become one of India’s largest and most profitable end-to-end travel industry player in the insurance services industry, providing distribution, travel insurance, forex, MICE, Visa services, and travel technology services through our recent acquisition of Zillious – all under one roof.

International Footprint: With more than 9,000 employees located in India alone besides thousands outside India, and a present travel expanse spanning GCC countries, ASEAN and Asia Pacific countries; and the stated goal of spreading our travel business to North Americas, Latin America and Europe, Ebix provides a truly global platform with “on-the-ground” presence in major markets worldwide. Our global offices are staffed with local nationals possessing language skills and a deep familiarity with local customs, business norms and regulatory frameworks.

Ebix Chairman, President and CEO Robin Raina, commented, “We believe that Yatra Online’s products and services are complementary to EbixCash’s travel portfolio of Via and Mercury; and a combination of the two companies would lend itself to significant synergies and the creation of the India’s largest and most profitable travel services company. We see substantial synergies, economies of scale and expanded growth potential for the combined business. Our interest in making an offer for Yatra Online is also borne out of our firm belief that a combination of the two companies could be substantially and immediately accretive to Ebix’s EPS.”

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