India's Yatra valued at $218 million in reverse-merger with Terrapin
India-based Yatra said it signed a reverse-merger deal with NASDAQ-listed Terrapin 3 Acquisition Corporation, enabling the travel service provider to be valued at $218 million. The deal will see Yatra's listing on the NASDAQ under the ticker YTRA, joining the small fleet of Indian companies trading on the index. The combined company will be led by Yatra's co-founder and CEO Dhruv Shringi.
What is a reverse merger?
A reverse merger is one in which a private company acquires a public company, enabling it to obtain public listing and benefiting the acquirer since it doesn't have to raise capital. This is often times considered as an alternative to the complex process for stock-listing.
Yatra: An overview
Yatra started out as an online travel agent in August 2006, based out of Gurugram, in Haryana. Six years later, the website rose to clock over 30% market share across the online travel portal, and became one of the largest travel websites in India. Over the last fiscal year, the website has seen over 2.8 million transactions, amounting to almost $900 million.
Terrapin 3 Acquisition Corporation
NASDAQ-listed Terrapin 3 Acquisition Corporation is a blank-check company, one that aims to grow with mergers and acquisitions without having a definite business structure in place. Terrapin 3, founded by Nathan David Leight, and backed by investors such as Macquarie Group, raised around $212.75 million in its July 2014 IPO. The company is currently traded under the ticker TRTL.
Deal specifics: Yatra and Terrapin 3 merger
Yatra will close the deal in multi-phased transactions, with the initial $100 million to be channeled to the combined company's balance sheet to help meet the transaction's expenses. Yatra's current promoters and stakeholders will continue to see ownership of at least 35% of the outstanding and issued shares in the company, post its merger. The deal is expected to close in October 2016.
Terrapin on cash allocation after the merger
"Any amount greater than $100 million available from TRTL will then be allocated 80% to current Yatra shareholders and 20% as cash to the combined company's balance sheet. Cash payments to current Yatra shareholders will be capped at $80 million", according to the company's statement.
Aftermath of the Yatra-Terrapin merger
The combined company will be called Yatra.com. After MakeMyTrip, it will become the second Indian travel agency to list on the NASDAQ. Yatra's Indian and US venture-capital investors like Reliance Venture and Valiant Capital will continue to own at least a third of the combined company. Yatra shareholders may receive up to $35 million if post-merger objectives are met in 18 months.
