MakeMyTrip Ltd has said it will acquire Ibibo Group’s travel business in India to create India’s largest online travel firm. How much is this combined entity worth?
MakeMyTrip had a market capitalisation of $850 million before the deal was announced, besides which it had debt worth roughly $180 million. In all, it was valued at 6.1 times fiscal 2016 revenues.
After the deal was announced, MakeMyTrip’s market capitalisation rose by 44% to $1.22 billion. But that’s not all. The company’s filings suggest massive equity dilution post the deal, with the total share count expected to rise by as much as 2.4 times. In other words, investors are valuing the combined entity at $2.9 billion, or around 10.8 times estimated revenues of the combined entity.
Note also that according to the bankers to the deal, the combined entity was valued at $1.8 billion, with Ibibo contributing 40% to the total. Since when have bankers’…
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