Online retailer Flipkart is in talks to acquire Cleartrip, one of India’s largest online travel aggregators, reports suggest. The acquisition will help the Walmart owned e-commerce giant to diversify its business into travel space.
The Flipkart-Cleartrip deal, which is likely to value Cleartrip at around $40 million, will be a mix of cash and equity. This is considered to be a distress sale for the 15-year-old Mumbai based firm, according to reports.
"Discussions are going on between Flipkart and Cleartrip, whose financial performance was hit due to the COVID-19 pandemic," said a Business Standard report quoting a person familiar with the matter.
It goes on to add that Flipkart is looking to diversify in sectors such as insurance and travel.
Flipkart is expected to retain the management and staff while allowing Cleartrip to operate as an independent brand. Cleartrip's backend engine will support Flipkart’s travel and hotel bookings.
"Flipkart 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," said another report quoting a source.
Cleartrip had last raised funds in 2016 taking its total funding up to $70 million. Cleartrip’s present investors include Concur Technologies, an integrated travel and expense management solutions provider, DAG Ventures and Gund Investment. Its early investors like Kleiner Perkins, Sherpalo Ventures, and DFJ have exited the company.
Cleartrip was founded in 2006 by Hrush Bhatt, Matthew Spacie and Stuart Crighton, as an online hotel and air travel booking platform. It has been facing tough competition from bigger players like MakeMyTrip and GoIbibo.
The travel and airline business has been hit hard by the pandemic. Cleartrip laid off 400-500 employees during the lockdown period.
