Yatra to pay $10.7 mn in final payment to complete Air Travel Bureau acquisition

Yatra to pay $10.7 mn in final payment to complete Air Travel Bureau acquisition
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30 Jul, 2020

Travel portal Yatra Online has reached a settlement with corporate travel services provider Air Travel Bureau (ATB) over a pending transaction relating to the acquisition of the latter.

According to the revised final payment, Yatra will pay Rs 80 crore ($10.7 million at current exchange rates) to sellers including Sunil Narain, one of the key shareholders of ATB, to acquire the balance outstanding shares of ATB, Yatra said in a filing with the US Securities and Exchange Commission (SEC).

The 100% acquisition of ATB will allow for greater integration of the business going forward, the company said in its filing.

According to Yatra, the settlement amount for the final is Rs 39 crore lower as against the earn-out contingency provision of Rs 119 crore on its last balance sheet.

Yatra has been locked in an arbitration over the final payment to be made to acquire the remaining shares of ATB.

The issue dates back to a three-year-old deal where Yatra Online, Yatra’s Indian arm, inked an agreement to acquire a majority stake in (50.94%) in ATB in the first phase for Rs 51 crore with the remaining stake to be picked up at a later date.

The second round of the transaction has been pending as the two sides have not been able to agree on the valuation. This was to be completed in the April-June quarter of 2018 with the total deal value estimated to be between $22.5 million and $27.5 million.

In early 2019, ATB chairman Narain filed a complaint against Yatra at the Economic Offences Wing of the Delhi Police. Among other things, he alleged Yatra of cheating and criminal breach of trust in connection with Yatra India’s obligations under the share purchase agreement. 

Narain accused Yatra of attempting to dampen the value of the remaining stake sale through fraudulent means after taking charge of ATB because the balance payment was linked to the company’s financial performance.

Yatra denied the allegations and in response, filed a petition with the High Court of Delhi seeking, among other things, interim relief against the complainant. Based on the petition, the court issued an order granting certain interim relief to Yatra India in May last year. The court also referred the matter to arbitration and also appointed an arbitrator.

According to the company’s most recent filings with SEC, it made an advance payment of Rs 20 crore in FY19 towards the acquisition of the balance outstanding shares.

In October, both parties reached an agreement to settle all disputes. In a joint application, they requested the High Court of Delhi for the disposal of the arbitration proceedings. Subsequently, the arbitration proceedings were terminated and a consent award was passed by the arbitrator.

Another joint petition was filed with the High Court of Delhi to quash the FIR (first information report), which was also granted in December 2019, though it imposed certain costs on Yatra. However, Yatra made another appeal in the Supreme Court and the costs were reversed.

Both parties then agreed to appoint an accounting firm to calculate the final purchase price adjustments necessary to determine the amount of a final payment, which concluded on Wednesday, July 29, 2020.

Early last month, Yatra terminated a merger agreement with Ebix over alleged violation of agreement terms. It also initiated legal proceedings against Ebix in the Delaware Court of Chancery, seeking substantial damages. If the deal had gone through, the online travel agency would have had an enterprise valuation of $338 million, according to the merger agreement drafted on July 16, 2019. 

Weeks later, the company raised $11.5 million through the public market route. The Gurugram-based company sold 14.37 million ordinary shares at $0.80 per share, including 1.87 million shares that were part of the underwriter’s option.