Oyo — one of the leading budget hotel chains in India, had last year acquired its rival Zo Rooms. However, recently, the company said that it is now calling off the deal.

SoftBank, which is the largest investor in Oyo, had indicated about 20 months ago that a deal had been concluded, or was imminent. It is believed that the talks between OYO and Zo Rooms, for a potential acquisition by the former, had started in November 2015.

In a statement released by Oyo, it said,

In late 2015, OYO explored a potential acquisition of Zo Rooms. 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.

Both, OYO and Zo Rooms, have never publicly commented on the deal. Zo Rooms was reported to have shut its website and mobile app last year.

In response, the spokesperson of Zo Rooms said:

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 not yet known what are the company’s plans to enforce its rights. It has even not clarified if it was contemplating legal action against Oyo.

Oyo recently raised ₹64 crore funding round from China Lodging Group. It was announced just a week after the company raised Rs 1,600 crore funding from SoftBank Vision Fund and Hero Enterprise.

On the other hand, Zo Rooms was founded in 2014 and has raised over ₹305 crore in Series A and Series B funding round from Tiger Global Management and Orios Venture Partners.

According to Deutsche Bank, nearly two-thirds of India’s rooms supply in 2020-21 will comprise of budget hotels. Criteo is expecting the online travel market in Asia Pacific to be worth $446 billion in value by 2020.