Walmart-backed Flipkart has acquired 100% of online travel technology company Cleartrip and will expand its travel booking vertical, according to a press release announcement.
Under the terms of the agreement, Cleartrip will continue to operate as a separate brand, retaining all employees while working closely with Flipkart to further develop technology solutions to make travel simple for customers. Specific details of the deal were not provided in the press release, but according to a report by Economic Times the acquisiton around $40 million and will financed through a mix of cash and equity.
Several reports claim that the takeover is “a distressed sale” due to the pandemic-inflicted pain on the travel and hospitality industry. According to Tofler, Cleartrip reported loss of Rs 14 crore in FY20, which translates to a 53 per cent decrease compared to the previous year.
“Flipkart now wants to invest in Cleartrip and push the pedal on this category. They will back Cleartrip so that it can take on the bigger players in the highly crowded online travel booking industry, which has not been able to clock profits due to the low margins in air travel,” the report said quoting an unnamed person privy to the deal.
“…Cleartrip is synonymous with travel for many customers, and as we diversify and look at new areas of growth, this investment will help strengthen our wide range of offerings for customers. We welcome the Cleartrip team with their deep industry knowledge and technology capabilities to the Flipkart Group and look forward to providing deeper value and travel experiences for customers together,” said Kalyan Krishnamurthy, chief executive officer, Flipkart Group.
Stuart Crighton, CEO and co-founder of Cleartrip, said, “…This product-driven focus has enabled us to become the preferred travel partner of choice for consumers in a wide range of markets in the region. We are delighted to be part of the Flipkart family and are excited about the positive impact this collaboration can have for our customers and the travel industry in general.”
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With this acquisition Flipkart has expanded its footprint in a cut-throat segment, which has not only taken a hit due to the pandemic but also has presence of chief rival Amazon India and PayTM. Both these platforms have been diversifying their offerings to include services such as food delivery, e-pharmacy, travel bookings and so on.
Flipkart first ventured into the online travel booking segment when it struck a partnership with Makemytrip in 2018. Later in 2019, they announced a partnership with Ixigo, a mobile travel platform.
With the current acquisition, Flipkart will be in a improved position to take on rivals such as Yatra, booking.com, EaseMyTrip and so on. The move will also enable Flipkart to offer train bookings as Cleartrip has a partnership with IRCTC.
Simultaneously, Amazon India too has been amping up its capabilities in this sector. Last year it partnered with IRCTC and Cleartrip to add train and flight booking options respectively.
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