Over 20 months following Oyo’s acquisition of its rival Zo Rooms, the India-based budget hotel chain decided to drop the transaction.
SoftBank, Oyo’s largest investor, reported the deal with Zo Rooms 20 months ago, but talks for the company sale between the two hotel groups began in November 2015.
According to a statement released by Oyo, “the non-binding term sheet for this deal already stands terminated in September 2016. Following this, we tried to identify potential value in their business, but could not reach an outcome. We can now confirm that Oyo has ended all discussions on the topic.”
Although the companies have never publicly commented on the deal, Zo Rooms reportedly shut down its website and mobile app in 2016. A spokesperson from Zo Rooms told The Indian Wire in response to Oyo, “As a matter of clarification, Zo states that Oyo is resiling from the contractual terms after acquiring the entire Zo Rooms business by March 2016. This is not an act in good faith, and Zo takes a very serious view of the matter and will take all steps to protect its interests and enforce its rights.” However, it is uncertain what plans Zo Rooms has to enforce its rights. Also, the company hasn’t stated if it is considering legal action against Oyo.
In recent months, Oyo secured ₹64 crore in funding from China Lodging Group after the company raised Rs 1,600 crore from SoftBank Vision Fund and Hero Enterprise. Meanwhile, Zo Rooms, which was founded in 2014, raised over ₹3015 crore in Series A and Series B funding rounds from Tiger Global Management and Orios Venture Partners.