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upGrad set to acquire Unacademy in deal with break fee clause

EntrackrEntrackr · 21h ago
upGrad set to acquire Unacademy in deal with break fee clause
Medial

Online higher education platform upGrad has signed a term sheet to acquire edtech firm Unacademy in an all-stock transaction. The firms will not disclose the valuation until the deal is completed and formally filed. The term sheet was signed after earlier talks between the two companies collapsed in January due to differences over valuation. Announcing the development, upGrad co-founder Ronnie Screwvala said the deal will be structured as a share swap and includes a break fee if the transaction does not close. Importantly, Unacademy’s co-founder and chief executive Gaurav Munjal will continue to lead the company and focus on building online learning products. Screwvala stated, “We at upGrad have signed a term sheet to acquire Unacademy in an all-stock deal, with founder and CEO Gaurav Munjal staying on to build Unacademy and focus on creating online education products that learners love.” He added that the combined entity could benefit from Unacademy’s product capabilities and upGrad’s broader learning ecosystem. According to Screwvala, upGrad’s integrated model spanning segments from K12 to lifelong learning could gain further momentum if the transaction closes. Munjal confirmed the development and said the proposed acquisition will be executed through a 100% share swap deal. Highlighting Unacademy’s recent changes, Munjal said the company has spent the past year restructuring parts of the business. “We consolidated company-operated centres with franchise partners so we could refocus on building great online education products,” he said. The company also completed a Rs 50 crore ESOP buyback, with nearly 40% of former employees participating, Munjal said. He added that Unacademy currently has more than $100 million in cash reserves. On the financial side, Unacademy reported a 16% year-on-year decline in revenue to Rs 826.3 crore in FY25 from Rs 988 crore in FY24. However, the SoftBank-backed firm reduced its EBITDA loss by 38% to Rs 305 crore and cut its net loss by 31% to Rs 436 crore.

Related News

upGrad–Unacademy deal called off over valuation differences

EntrackrEntrackr · 2m ago
upGrad–Unacademy deal called off over valuation differences
Medial

upGrad–Unacademy deal called off over valuation differences Confirming the development, Ronnie Screwvala, co-founder of upGrad, told Entrackr, “Yes, we are not proceeding due to valuation differences." The much-speculated acquisition talks between online higher education platform upGrad and test-prep major Unacademy have been called off after both parties failed to reach a consensus on valuation, according to sources aware of the matter. While we cannot comment on specific numbers, it is fair to say that we were unable to arrive at a mutually agreeable valuation. Entrackr had earlier reported that upGrad and Unacademy were engaged in merger and acquisition discussions as consolidation accelerates across India’s edtech sector. The talks drew attention at a time when Unacademy was navigating internal restructuring, implementing cost-rationalisation measures, and sharpening its focus on its core test-preparation business. In recent months, Gaurav Munjal, co-founder and CEO of Unacademy, had publicly acknowledged that the company was exploring various strategic options, including fundraising and potential M&A transactions, while maintaining that no decision had been finalised. Munjal had also clarified the company’s position on employee stock option (ESOP) exercises and valuation expectations, amid questions around internal liquidity and employee compensation. Separately, Unacademy has put on hold proposed amendments to its 2018 ESOS scheme following strong pushback from former employees. The objections were primarily linked to the tax implications and liquidity concerns associated with exercising stock options at a significantly lower valuation compared to earlier rounds. Unacademy has yet to comment officially on the stalled merger talks. Founded in 2015, Unacademy has raised over $800 million from investors including SoftBank, General Atlantic, and Tiger Global, and was last valued at around $3.4 billion during the peak of the edtech funding cycle. However, like several peers in the sector, the company has faced pressure to recalibrate growth expectations amid a prolonged funding slowdown. upGrad, which operates across higher education, upskilling, and overseas education segments, has previously pursued selective acquisitions to strengthen its portfolio.

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