New Delhi: Online travel firm MakeMyTrip Ltd has agreed to buy Ibibo Group’s travel business in India in an all-stock deal, creating the country’s largest online travel firm which, according to a note by Morgan Stanley, is worth $1.8 billion.

The deal value wasn’t announced, but the $1.8 billion valuation and the fact that Ibibo’s owners, Naspers and Tencent, end up with a 40% stake in the merged entity, translate into a transaction worth $720 million. Naspers owns a third of Tencent, its most valuable investment.

Naspers and Tencent jointly held a 91% and 9% stake in Ibibo respectively. They will become the single largest shareholder in the company.

China’s Ctrip, which in January committed to invest $180 million (about Rs1,200 crore) in MakeMyTrip through convertible bonds, will now see those instruments being converted into equity and end up with a stake of around 10% in the merged entity.

The deal will bring all brands of the Ibibo Group such as Goibibo, redBus, Ryde and Rightstay under MakeMyTrip. Together, Ibibo and MakeMyTrip processed 34.1 million transactions in 2015-16, the latter said in a statement.

MakeMyTrip shares rose more than 42% on Nasdaq in early trades on Tuesday, valuing the company at about $1.2 billion.

MakeMyTrip founder Deep Kalra will remain group chief executive and executive chairman of MakeMyTrip Group and co-founder Rajesh Magow will remain chief executive of MakeMyTrip’s India business. Founder and chief executive of ibibo Group, Ashish Kashyap, will join MakeMyTrip’s executive team as a co-founder and president of the organization, the statement added.

“ We expect this deal to create an even more scalable business with the expertise to transform the booking experience for Indian travellers," said Kalra. He added that the merged entity would retain and work through all brands, including Ibibo and MakeMyTrip. The transaction is expected to close by the end of December.

“India is a key market for Naspers, and this deal reinforces our commitment to the country," said Bob van Dijk, chief executive of Naspers.

The consolidation will “unlock value for shareholders", result in cost efficiency and mean wider product offerings for customers, Kalra said.

The merged entity will have 10 directors. Naspers (and Tencent) will nominate four, Ctrip one, and MakeMyTrip’s promoters two. The other three will be independent directors.

Morgan Stanley acted as the financial advisor to MakeMyTrip.

Goldman Sachs acted as financial advisor to Ibibo and Naspers.

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