Edtech

BYJU’S Issues Legal Notice to Aakash Founders over Share Transfer Dispute

• ByStartupStory     |    August 1, 2023

Think and Learn Pvt Ltd, the parent company of education technology startup BYJU’S, has sent a legal notice to the founders of Aakash Educational Services Limited (AESL) alleging their resistance to completing a share swap that was initially agreed upon during the sale of AESL. The acquisition, which took place in 2021 for approximately $940 million, involved a cash and stock deal, with TLPL owning 43% and founder Byju Raveendran holding another 27% of AESL.

The deal’s plan was for AESL to merge with TLPL, as it would be more tax-efficient for the seller, the Chaudhry family, who currently holds about 18% in AESL, and Blackstone, owning the remaining 12%. However, due to delays in the proposed merger by the National Company Law Tribunal (NCLT), TLPL has triggered the unconditional fallback agreement and issued a notice to the Chaudhry family, demanding the execution of the share swap. Despite this, the minority shareholders have declined to swap their equity holding in AESL with TLPL, as per sources familiar with the matter.

Around 70% of the acquisition amount was paid in cash, with the rest intended to be adjusted against TLPL’s equity. Blackstone and the Chaudhry family have reportedly declined to comply with TLPL’s notice sent in March, opting for a cash payout instead of the share swap. Upon the completion of the share swap, the Chaudhry family’s stake in TLPL would be slightly below 1%, which may result in potential tax liabilities, including on GST.

BYJU’S and AESL have not provided any official comments on the issue. The share swap was considered a crucial part of the acquisition agreement, aimed at enhancing tax efficiency for the seller, the Chaudhry family. Aakash Educational Services is expected to register three-fold growth since its acquisition by BYJU’S and close the financial year 2023 with revenue of approximately Rs 3,000 crore.

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