Yatra terminates Rs 2,300-cr merger pact with US software firm Ebix

Demands substantial damages due to alleged breach of agreement

Online travel company Yatra has terminated its pending merger agreement with US-based software firm Ebix and filed litigation against it in the State of Delaware, seeking “substantial damages” for alleged breaches of terms of the pact.
 
Ebix had signed the agreement last year to acquire Gurugram-based Yatra Online for an enterprise value of $338 million (about Rs 2,327 crore) in an all-stock deal.
 
“The complaint seeks to hold Ebix accountable for breaches of its representations, warranties, and covenants in the merger agreement and an ancillary extension agreement, and seeks substantial damages,” Yatra said in a statement late Friday. “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 its stockholders.”
 
The deal was supposed to conclude in the October-December quarter after regulatory approvals but went through several extensions, according to regulatory filings with the US Securities and Exchange Commission.
 
“The merger agreement contains 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, which was previously extended to May 4, 2020,” Ebix had said in a filing on May 20.
 
“Pursuant to the fourth extension agreement, the outside date has been further extended to June 4, 2020, in order to provide the parties with time to determine whether they can reach mutual agreement on an amendment of certain terms of the merger agreement,” Ebix added.
 

After the transaction, Yatra was to become part of Ebix's travel portfolio, EbixCash.
 
In its annual report filed to the US exchanges in March, Ebix had said difficulties in attracting, motivating, and retaining executives and key employees were a risk to the merger, as was exposure to risky Indian travel businesses such as the closure of Jet Airways.
 

Ebix did not respond to the development immediately.
 
Yatra in a second statement said it had implemented several cost reduction measures since April 2020 to improve profitability and efficiency. These include reducing management salaries by 50 per cent and variable reduction in salaries of 25-75 per cent across the board for the near term, freezing salary hikes, renegotiating supplier payment terms and conditions and fixed costs like rent, as well as deferring non-critical capital expenditures.
 
As of June 4, the company had $32.5 million (over Rs 240 crore) in total available liquidity and its current monthly run-rate operating fixed cost was approximately $1.2 million (over Rs 8 crore).

 
Yatra provides services such as domestic and international air ticketing, hotel bookings, homestays, holiday packages, bus ticketing, rail ticketing, activities and ancillary services.