South Africa-based Naspers has decided to sell its entire stake in MakeMyTrip to the Chinese travel company Ctrip International in a share swap deal. With this deal, Ctrip will become the largest stakeholder in the Indian online travel aggregator. The share exchange will help Ctrip to enjoy a large exposure to the Indian travel market, and allow MakeMyTrip to benefit from its Chinese investor's global outreach. The deal is expected to be closed in the second half of 2019 after securing the required approvals.
Naspers will transfer its 42.5 per cent stake in MakeMyTrip in exchange for a 5.6 per cent stake in Ctrip, the Indian website said in a filing to Nasdaq. The Chinese travel industry major will invest certain shares of MakeMyTrip in a third-party investment entity. Under this arrangement, Ctrip will hold 49 per cent share in MakeMyTrip, whereas the unaffiliated fund will get 4 per cent stake.
ALSO READ:BT Buzz: Piramal-Shriram alliance to end
The share swap between Naspers and Ctrip will occur at $32.30 per share, The Economic Times reported. It will amount to a 25 per cent premium to the most recent closing price and a 19 per cent premium to MakeMyTrip's current 30-day volume weighted average price. MIH Internet SEA, the Naspers-owned investment entity in MakeMyTrip will reportedly earn about $1.4 billion, which will be settled in Ctrip shares at $43.01 per share, the daily further added.
"We are grateful for the unstinting support Naspers has provided us over the last couple of years. We have worked with Ctrip in the past years and are excited to take this partnership to the next level. We will leverage this investment to benefit from the tremendous growth potential in travel and tourism between our two countries," Deepak Kalra, Chairman and Group CEO of MakeMyTrip, said in a statement.
"Over the past years we have witnessed the great achievements of MakeMyTrip, and we are confident that MakeMyTrip will extend its success in the future," said Ctrip Co-founder and Executive Chairman James Liang. "We are also delighted to welcome Naspers to become our shareholder. Ctrip will continue to work hard to create greater value for our customers, our partners and all shareholders", Ctrip CEO Jane Sun commented.
Naspers first invested in MakeMyTrip back in 2016 when the travel website was acquired by Ibibo. The tech and internet conglomerate's decision to give up its stake comes right before its planned listing of its international investments on the Euronext Amsterdam by the second half of 2019. In January 2016, Ctrip had invested $180 million in MakeMyTrip in the form of convertible bonds.
Naspers has investments to the tune of $3 billion in India, including stake in food delivery platform Swiggy. It exited Flipkart last year after US retail major Walmart acquired controlling stake in the homegrown e-commerce platform. It also owns financial technology company PayU, online classifieds platform Olx.