TravTalk India Online Magazine
In a major stand-off over their pending merger agreement, Yatra Online has announced the termination of its merger agreement with Ebix Inc. and filed litigation, while the latter has denied any breach of agreement in its part and expressed plans to file a countersuit against the second largest online travel company of the country.
Yatra’s move
Online travel company Yatra has announced that it has provided notice of termination of its pending merger agreement with Ebix, Inc. and filed litigation in the Court of Chancery of the State of Delaware over Ebix’s breaches of the merger agreement.
The online travel company has also sought substantial damages from the latter over “breaches of representations, warranties and covenants in the merger agreement and an ancillary extension agreement”.
As detailed in the complaint, Ebix’s conduct breached material terms of the agreements and frustrated Yatra’s ability to close the transaction and obtain the benefit of Yatra’s bargain for Yatra’s stockholders. Providing a business update, the company has said that on a stand-alone basis, Yatra has the strategic and financial resources required to continue its strategy to consolidate the corporate travel services sector in India, where it is currently the largest provider.
Yatra believes it has a strong financial position to support the company over the coming quarters. As of June 4, 2020, the company had US$32.5 million in total available liquidity and its current monthly run-rate operating fixed cost was approximately US$1.2 million (excluding any litigation related expenses).
Ebix’s response
A day after Yatra Online announced termination of the said merger agreement, Ebix Inc., which was supposed to acquire the online travel company, issued a statement where it expressed strong disagreement to the allegations set forth by Yatra. Ebix intends to enforce all of its rights under the said merger agreement and is currently considering all options, including a countersuit against Yatra, on account of multiple breaches of the merger agreement. In its statement, Ebix said, “On May 14, 2020, Yatra Online, Inc., a Cayman Islands exempted company limited by shares (“Yatra”), entered into an agreement (the “Fourth Extension Agreement”) with Ebix, Inc. (“Ebix”) extending the outside date of the Merger Agreement (the “Merger Agreement”), dated July 16, 2019, by and between Yatra, Ebix and EbixCash Travels Inc., a direct, wholly-owned subsidiary of Ebix (“Merger Sub”) to June 4, 2020 (the “Outside Date”). The Merger Agreement contained certain termination rights for Ebix and Yatra, including, among others, the right of either party to terminate the Merger Agreement if the Merger has not been consummated on or prior to the Outside Date. The Outside Date was extended to June 4, 2020, in order to provide the parties with time to determine whether they could reach mutual agreement on an amendment of certain terms of the Merger Agreement. After the expiration of the Outside Date and the failure of the two parties to agree on the terms of an amended Merger Agreement by the Outside Date, Yatra terminated the Merger Agreement on June 5, 2020, and filed suit against Ebix in the Delaware Court of Chancery for breach of contract. Ebix worked diligently to fulfil its obligations under the Merger Agreement and thus strongly disagrees with the allegations set forth in the complaint. Ebix intends to enforce all of its rights under the Merger Agreement and is currently considering all options, including a countersuit against Yatra, on account of multiple breaches of the Merger Agreement.” Ebix had offered to acquire Yatra at an enterprise value of US$336 million and a net equity value of US$239 million to boost its portfolio of Indian travel ventures.
