Edtech

Unacademy in Talks with Allen Career Institute for Potential $800 Million Sale

• ByStartupStory     |    December 5, 2024

Unacademy, one of India’s prominent edtech firms, is reportedly in advanced discussions with Allen Career Institute for a potential merger. If finalized, the deal could value Unacademy at $800 million, a significant drop from its peak valuation of $3.4 billion. The development was first reported by The Economic Times.

The ongoing negotiations, spanning several months, hinge on final approval from the Maheshwari family, the promoters of Allen Career Institute. Sources close to the matter revealed that while other stakeholders are keen to move forward, the final decision rests with the Maheshwari brothers.

“The valuation of both companies will be used to fix the share swap ratio, and that process has not yet been completed,” a source familiar with the talks told ET. The discussions also involve deliberations on cash payouts for Unacademy’s founders and early investors.

If successful, the merger would signify a notable consolidation in the edtech space, which has been navigating turbulent times. Post-pandemic slowdown, along with the fallout of Byju’s bankruptcy and allegations of financial irregularities, has cast a shadow over the sector.

Unacademy, based in Bengaluru, initially an online-only platform for nearly a decade, has recently pivoted to include offline operations. Despite managing to control its losses, the company’s revenue growth has remained flat. Meanwhile, Allen Career Institute, known for its coaching centers in Kota and beyond, has faced profitability challenges amidst a dip in the Kota ecosystem’s business.

Valuation and Cash Balance

The valuation being discussed includes Unacademy’s reported cash reserves of $160 million, a contentious point in the negotiations. According to sources, this cash balance is being excluded from Unacademy’s enterprise valuation, creating friction between the two parties.

Investment banks representing both sides are involved in the discussions. The resolution of these financial and operational details will be crucial in determining the merger’s success.

Emails sent to Allen founder-director Rajesh Maheshwari and CEO Nitin Kukreja received no response. Similarly, Unacademy co-founder and CEO Gaurav Munjal did not respond to The Economic Times’ request for comment. Startup Story could not independently verify the report.

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