Unacademy and BYJU’S-owned Aakash are reportedly in talks of a possible merger, even if both parties have denied the same.
Education sector behemoth
If the talks succeed, Unacademy and Aakash will combine to form one of India’s largest tutoring organisations.
It will gain a stronghold on the offline and online test preparation markets in the country.
BYJU’S bought brick-and-mortar education player Aakash in a cash-and-stock deal worth about $950 million in 2021.
Moneycontrol reports that the discussions are still in early stages and that any transaction may not actually go through.
Cash and stock combined
It has not yet progressed to the term sheet level, the report added.
However, if the talks do materialise, it will be a combination of cash and stock.
A part of this merger deal, about $100 million, will be in cash.
The combined entity will consider an IPO rather than Aakash acting alone to seek a public listing, the report noted.
Both firms share a number of backers, including General Atlantic, Tiger Global, and Sequoia Capital.
Common investors in both are interested in a merger since the combined entity could make a stronger case for a possible IPO.
What the board will look like
BYJU’S Co-founder Byju Raveendran and Unacademy Founder Gaurav Munjal have been in talks during the past month.
If the deal goes through, Munjal is anticipated to lead the combined entity, but Byju’s may be given a board position.
Latest funding rounds
Unacademy last raised $440 million in August 2021 at a valuation of $3.4 billion.
BYJU’S raised its last equity funding round of $250 million in October 2022 at a fixed $22 billion valuation.
BYJU’S needs this
The merger should serve as a lifeline for BYJU’S —which is struggling with the delay in its fundraising due to a delayed due diligence process.
Earlier this month, Bloomberg News reported that BYJU’S is planning to raise as much as $250 million through the issuance of convertible notes by Aakash.
As per reports, Aakash had sales of roughly Rs 1,400 crore in FY22 and is anticipated to surpass Rs 2,500 crore this year.