One of India’s oldest and leading travel agencies, Cox & Kings is now a takeover target and the two contenders are Ebix Inc from the USA and India’s own MakeMyTrip, according to an Economic Times report.
Cox & Kings is already a basket case: The company’s noncurrent debts are at Rs 1,240 crore and the short-term borrowings stand at Rs 1,704 crore and other financial liabilities of about Rs 1,500 crore are outstanding. These figures are according to the company’s FY19 annual report.
In terms of shareholding, the report states that promoters’ shares are in two lots one with the promoter Peter Kerkar himself, which is around 21% and then 18.55% shares with Yes Bank, which had lent money to the company against these shares and due to non-payment, they are now devolved to the bank. The shares have however been losing their value in the stock market with the share falling steeply from Rs 2,485 crore to just Rs 183 crore, a 93% drop in just 2-3 months, the last quoted rate being Rs 10.39.
That Cox & Kings will be a good addition to either of the contenders is very much understandable. For Ebix, which has already annexed Yatra.com to its portfolio, an offline travel agency specializing in outbound travel bookings from India would be a huge step. MakeMyTrip, which is a Nasdaq listed company would also be keen to expand its base and Cox & Kings will be an ideal foil to its plans going ahead. Ebix has pumped in $1 billion in the Indian market in the tours and travel space.
It may all boil down to the valuation. With the company’s valuation down so much as indicated above, and mounting dues to creditors, the game could lead to who will blink first. The lenders may have to agree to take a haircut, but to what extent will be the larger question.
If Cox & Kings is referred to the NCLT for insolvency proceedings, the lenders may be left with no option but to take whatever is offered.