Byju’s Is Set To Buy US-Based 2U For More Than $1 Billion
- ByStartupStory | June 29, 2022
According to a person familiar with the situation, Indian online education provider Byju’s has made an offer to acquire 2U Inc. in a cash deal that is valued at more than $1 billion for the US-listed edtech company. According to the person who asked to remain anonymous because the bid hasn’t yet been made public, Byju’s made the board of 2U an offer of around $15 per share last week. The offer values the Lanham, Maryland-based business at approximately $2 billion, or a 61 per cent premium to 2U’s Tuesday closing price of $9.30 on the Nasdaq.
Byju’s, one of the most valuable businesses in the world, is speeding its global expansion through acquisitions with support from Mark Zuckerberg’s Chan Zuckerberg Initiative and Tiger Global Management. Byju’s was expected to make an offer for either 2U or Chegg Inc., according to a May Bloomberg story. The person claimed that discussions with Chegg, situated in Santa Clara, California, have not progressed. If 2U’s board rejects the offer, the negotiations with the company could still fall apart and a deal would not be completed. The market worth of 2U is currently $717 million, but it has over $1 billion in debt and other liabilities.
According to the source, Byju’s has funding of more than $2.4 billion in place for whichever purchase it ultimately decides to pursue in an effort to accelerate its growth and global expansion. Even though debt financing is more expensive than it was three months ago, the source noted that deals are still looking good and that assets are less expensive. Since reaching a top of $55.55 in early 2021, shares of 2U have dropped by more than 80%.
According to persons familiar with the situation, Byju’s is delaying payments for a $1 billion acquisition of the test preparation company Aakash Educational Services made last year. According to one of the persons, Byju has requested a postponement of the payments until late August because authorities have not yet approved the transaction. They said that there was no liquidity crunch involved. According to the source, the extension was approved by Aakash’s shareholders.
According to market researcher CB Insights, Byju’s has a $22 billion valuation, making it the most valuable startup in India. 7 million of the 115 million students who use the edtech pioneer’s online learning platform, formerly known as Think & Learn Pvt, pay annual membership fees. Along with Naspers Ltd., Silver Lake Management, and Mary Meeker’s Bond Capital, it has other supporters.
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