NEW DELHI—Two Wide Info of India’s biggest online travel booking platforms are merging, the latest example of startup consolidation in the world’s second-most-populous country.
Nasdaq-listed MakeMyTrip Ltd. said Tuesday it is acquiring ibibo Group from South Africa-based global internet and entertainment company Naspers Ltd. Chinese internet giant Tencent Holdings Ltd. for 40% of the shares of a new, combined entity.
The companies said in a statement that Naspers owns 91% of ibibo through a jointly-owned holding company, while Tencent owns the remaining 9%. A MakeMyTrip spokeswoman declined to comment Wednesday on whether the same breakdown would pertain to the stake in the new firm. According to the Nasdaq website, MakeMyTrip had a market capitalization of $1.24 billion at market close Tuesday. The companies didn’t provide value for the deal, and the spokeswoman declined to comment on it.
The companies said the deal should “unlock value” by “combining the complementary strengths of each business.” They added that the transaction should close by the end of December, subject to approval by shareholders and regulators. Jefferies analyst Arya Sen wrote in a research note that the deal is a “game-changer” for MakeMyTrip since it combines the top two players in India’s online travel sector, which has been “hurt by high burn rates resulting from the high competitive intensity.”
Gurgaon, India-based MakeMyTrip, offers bookings for flights, hotels, buses, and trains. Ibibo, also based in Gurgaon, says it is India’s largest hotel booking site and provides flight booking and other bus ticketing and car-sharing services. The companies said the start-up services were responsible for 34.1 million transactions in the 2016 fiscal year.
India represents huge potential for technology startups since many people get online for the first time. Many startups have been burning through cash spent on advertising and discounts to woo new users, but venture capitalists have been tightening the taps in recent months.
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According to data from CB Insights, investments in India’s startups plummeted 69% to $1.05 billion in the third quarter of this year from $3.41 billion a year ago. Analysts say investors, eager to see a return on their investments, push startups to become profitable, leading to consolidation as peers gobble up one another.
In July, prominent Indian e-commerce firm Flipkart Ltd. bought a smaller rival, online retailer Jabong, for $70 million. That deal came amid rapid expansion in India by Amazon.com Inc., which has said it will invest $5 billion in India.
In August, Bangalore, India-based ride-hailing service Ola said it laid off hundreds of workers at a fellow operator, TaxiForSure, bought in 2015. That move came as U.S. titan Uber Technologies Inc. has been boosting its efforts to win new riders and drivers in the country. In January, Quikr, an online classifieds portal, said it acquired the property listings portal CommonFloor.
