At an Ebix management meet hosted by Robin Raina in October, online travel aggregator (OTA) Yatra was the toast of the town. Indeed, at an event that saw the who’s who of politics, media, Bollywood, and sports turn up, Yatra’s entire top brass was front and centre. Raina, the founder and CEO of Ebix, a US-based software company, proudly introduced Yatra as part of the “Ebix family”, according to a source who attended the event.
Five months on from welcoming Yatra into the fold, Yatra is out of the family. Ebix’s attempts to acquire it in a $337.8 million deal have flamed out in spectacular fashion. The 14-month-long saga finally ended when Yatra filed for the termination of the merger agreement with the Securities and Exchange Commission (SEC), the US market regulator.
Incidentally, Yatra’s move comes mere days after The Ken sent both Ebix and Yatra a detailed set of questions, seeking answers about the status of the proposed merger. While neither company has responded to these questions, Yatra pulled the trigger after markets in India closed on Friday. It has even sought “substantial damages” owing to Ebix allegedly breaching terms of the merger agreement.
Well before the official announcement, though, there were strong indications that the deal wouldn’t happen. When Ebix officially commenced its due diligence on Yatra in March 2019, it announced that the deal would be completed by May that year. That did not happen. Instead, the deal consummation date was extended several times—the latest, and final, being on 4 June 2020.
Even as talks dragged on, valuation concerns regarding the deal grew. The acquisition was supposed to be an all-stock deal, where Yatra was valued at $4.9 per share, with Ebix’s collar price at $53 a share. Since then, Yatra’s stock has plunged to $1.30. Ebix is at $25.83, as per its last traded price.
Shareholders on both sides were unhappy with the deal. “Yatra is in deep trouble,” says Sunil Shah, a former fund manager and investor in Ebix. “It is highly unlikely to make a profit. The Yatra deal would be a huge liability on Ebix given that the currency of this acquisition—Ebix shares—has fallen sharply.” Earlier this year, Shah claimed claimed Seeking Alpha Ebix's legal notice to Sunil Shah Read more that Ebix served him a cease and desist notice due to his persistent criticism of the company’s functioning.
Yatra investors were also unhappy with the pricing of the deal. “I thought the price was low. I did not really understand the workings of Ebix, so as a shareholder (or an advocate for shareholders), I did not like the idea of becoming an Ebix shareholder.
