Allen Institute considers $800 million acquisition of Unacademy .
Allen Career Institute is negotiating to acquire Unacademy for $800 million.
Unacademy’s founders may leave the company if the deal proceeds.
The deal requires approval from the Maheshwari family, Allen’s promoters.
Allen Career Institute is reportedly in advanced negotiations to acquire Unacademy, a leading edtech platform in India, for $800 million, according to The Economic Times.
This proposed purchase coincides with Unacademy’s struggles to hold onto its $3.4 billion 2021 valuation. The company’s market value has significantly decreased, as seen by the estimated $800 million valuation that includes $160 million in cash reserves.
Coaching center chain Allen Institute is reportedly in talks to acquire Unacademy for ~₹6,775 crore! pic.twitter.com/gZSWRXF3hb
— Marketing Maverick (@MarketingMvrick) December 4, 2024
The Maheshwari family, the promoters of Allen Career Institute, a major force in India’s test-prep industry, must approve the agreement, which has been in the works for several months. A crucial component of the merger, the share swap ratio, is presently being determined by investment banks. The number of Allen shares that Unacademy shareholders will get in exchange for each of their existing shares will be determined by this ratio .
There is also discussion about potential financial incentives for Unacademy’s original investors and creators. Negotiations are being led by Unacademy co-founder Gaurav Munjal and Allen investor Bodhi Tree.
If the deal closes, Unacademy’s original founders, including CEO Gaurav Munjal, Roman Saini, and Sumit Jain, are most likely to go. Hemesh Singh, the Chief Technology Officer, previously departed.
Over the past 12 months, Unacademy has cut expenses due to severe financial difficulties. In July 2024, the corporation laid off 250 workers as part of a restructure. Several top executives quit their jobs, so this is indicative of the organization’s ongoing issues.
Additionally, the company came under fire earlier this year when CEO Gaurav Munjal declared in a virtual town hall that there will be no staff appraisals because of the poor growth, despite excellent performance. Online outrage followed Munjal’s statement since she was wearing a $400 Burberry T-shirt, which many said was tone deaf.
If completed, this transaction will be among the biggest consolidations in India’s edtech market, highlighting the financial pressure on businesses in the sector.
