Ebix has hit back after Yatra Online decided to terminate the $337 million merger agreement between both parties in a sudden move that rocked the travel services industry. In an official statement, the Atlanta headquartered firm said it “intends to enforce all of its rights under the merger agreement and is currently considering all options, including a countersuit against Yatra, on account of multiple breaches of the merger agreement.”
The Ebix response followed Yatra Online’s announcement on June 6 that it had terminated a pending merger agreement with Ebix and opted for litigation seeking ‘substantial damages’ over alleged breach of deal terms. The aggressive stance of both parties has set the stage for fireworks in court at a time when the novel coronavirus, or COVID-19, pandemic has hit mergers and acquisitions (M&A).
The Ebix statement said that the firm “worked diligently to fulfil its obligations under the merger agreement and thus strongly disagrees with the allegations set forth in the complaint,” adding that both parties had agreed to extend the deadline for the merger agreement to June 4 to mutually agree on changes to certain terms of the transaction.
“On May 14, Yatra Online entered into an agreement with Ebix, extending the outside date of the merger agreement dated July 16, 2019, by and between Yatra, Ebix and EbixCash Travels, a direct, wholly-owned subsidiary of Ebix, to June 4. The merger agreement contained 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. The outside date was extended to June 4 in order to provide the parties with time to determine whether they could reach mutual agreement on an amendment of certain terms of the merger agreement.
After the expiration of the outside date and the failure of the two parties to agree on the terms of an amended merger agreement by the outside date, Yatra terminated the merger agreement on June 5 and filed suit against Ebix in the Delaware Court of Chancery for breach of contract,” the statement said.
In its complaint, Yatra said it 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.”
“As detailed in the complaint, 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,” it added.
Separately, Yatra said it has implemented certain cost-saving measures starting April, including cutting management salaries by half and freezing salary hikes to weather the impact of the COVID-19 pandemic on its business.
On July 17, 2019, Ebix, the international supplier of on-demand software and e-commerce services to the insurance, financial, healthcare and e-learning industries, and Yatra Online announced that they had entered into a definitive agreement under which Ebix would acquire Yatra via merger at an enterprise value of $337.8 million. The transaction was aimed at creating India’s largest and most profitable travel services company.
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