Yatra Online, Inc., an India-based online travel agent, and Terrapin 3 Acquisition Corporation (TRTL), announced on Thursday that they have entered into a definitive agreement to combine in a transaction that values Yatra at an enterprise value of $218 million.
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TRTL is a special purpose acquisition company formed for the purpose of effecting a merger, acquisition, or similar business combination. Yatra will be the surviving company in the transaction and intends to be listed on the NASDAQ Stock Market under the symbol 'YTRA', following completion of the transaction. The combined company will continue to be led by Yatra's management team under the leadership of CEO and co-founder Dhruv Shringi.
Launched in August 2006, Yatra, through its website - Yatra.com - is an online shop for travel-related services aimed at both leisure and business travellers in India. A leading consolidator of travel products, Yatra claims to provide reservation connectivity for more than 60,000 hotels in India. Yatra.com provides information, pricing, and booking capability for domestic Indian and international air travel, hotel bookings, holiday packages, and bus and railway reservations.
Customers can access yatra.com from their desktop or mobile browsers, via Yatra's mobile applications, a 24x7 multi-language call centre, and a countrywide network of holiday lounges and Yatra Travel Express store locations.
During their fiscal year that ended in March 2016, Yatra claims that its customers booked more than 2.8 million air travel reservations and hotel stays with total transaction value worth more than $900 million (at current exchange rates) , an increase of 25 percent from the prior year (at constant currency rates) with 74 percent of transactions coming from repeat clients. In a statement, CEO Dhruv said,
We are excited to partner with TRTL in a transaction that we believe will enable Yatra to continue its growth as a new public company. This transaction gives us substantial additional resources to support our growth and the continued improvement of our integrated online and mobile platforms.
Yatra's current key investors include leading US and Indian venture capital firms and Indian strategic investors. This group will continue to own approximately a third or more of Yatra upon the consummation of the business combination.
TRTL raised $212.75 million in its IPO which is now held in a trust account. MIHI LLC, an affiliate of Macquarie Capital ("MIHI") has committed to purchase an additional $20 million of TRTL equity as part of the transaction. Under the terms of the proposed transaction, it is estimated that the current shareholders of Yatra will continue to own at least 35 percent of the issued and outstanding shares in the combined company.
Nathan Leight, Chairman of the board of TRTL, said, "We created TRTL with the express purpose of partnering with a company that would benefit from a public listing, could utilise our cash resources for growth and generate long-term returns for our shareholders. The infrastructure required to compete in India as an online travel agent represents a significant barrier to market entry. We believe Yatra has created tremendous competitive advantages. Not only is India one of the fastest growing economies in the world, business and leisure travel are among the fastest growing parts of its economy. Adding to that India's tremendous socio-economic trends toward urbanisation and the rapid adoption of e-commerce and smartphone use by a population with increasing amounts of disposable income, we are excited about Yatra's prospects."
Promod Haque, Senior Managing Partner at Norwest Venture Partners, said, "We are delighted to have TRTL on board in combination with Yatra. We believe that the online travel market in India has a long runway of future growth with the key drivers of increasing prosperity, smartphone penetration and internet access across broad sections of the population."
The financial side of the merger
The releases states that the first $100 million of cash (including MIHI's $20 million forward purchase) will be allocated entirely to the combined company's balance sheet and to pay transaction expenses. Any amount greater than $100 million available from TRTL will then be allocated 80 percent to current Yatra shareholders and 20 percent as cash to the combined company's balance sheet. Cash payments to current Yatra shareholders will be capped at $80 million.
In addition, existing shareholders of Yatra may receive additional consideration of up to $35 million upon the achievement of certain financial objectives during the 18 months after closing.
In order to facilitate the transaction, TRTL's sponsors have agreed to reduce the number of founder shares by half, that they would have otherwise had at closing and MIHI has agreed commensurately to reduce the amount of its forward purchase of TRTL shares, made at the time of TRTL's IPO, from $40 million to $20 million.
The boards of directors of both TRTL and Yatra have approved the proposed transaction. Completion of the transaction, which is expected in October 2016, is subject to approval by TRTL stockholders and other customary closing conditions.
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- Dhruv Shringi
- Terrapin 3 Acquisition Corporation
- Nathan Leight
- Yatra Online Inc.
- Yatro IPO
- Promod Haque
- Just In