Allen Career Institute, a leading test preparation company in India, is reportedly in advanced discussions to acquire Unacademy, a prominent EdTech startup, for $800 million. This marks a significant drop from Unacademy’s $3.4 billion valuation in 2021, reflecting the struggles faced by many startups in the sector.
The $800 million valuation includes Unacademy’s $160 million in cash reserves, highlighting the financial challenges that have plagued the company. The deal, which has been under negotiation for several months, awaits approval from the Maheshwari family, Allen’s promoters. Investment banks are determining the share swap ratio, which will dictate the number of Allen shares exchanged for each Unacademy share. Discussions also include potential cash payouts for Unacademy’s founders and early investors.
If the acquisition proceeds, Unacademy’s founding team, including CEO Gaurav Munjal, Roman Saini, and Sumit Jain, is expected to exit. This follows the departure of Chief Technology Officer Hemesh Singh earlier this year.
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Unacademy has implemented cost-cutting measures, including laying off 250 employees in 2024 and freezing employee appraisals due to below-expected growth. The decision sparked online criticism when CEO Munjal delivered the news in a $400 Burberry T-shirt, raising concerns about perceived insensitivity.
The merger underscores the financial strain on India’s EdTech sector, with startups like Byju’s also grappling with declining valuations and operational challenges. If finalized, this would be one of the largest consolidations in the industry, reflecting the evolving landscape of EdTech in India.
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