upGrad to Acquire Unacademy in 100% Share-Swap Deal

Transaction Overview

upGrad, a leading education technology firm, has signed a term sheet to acquire Unacademy, a rival edtech company, in a 100% share-swap transaction. The deal is expected to take approximately two to three months to close, subject to regulatory approvals, including clearance from the Competition Commission of India.

Deal Details

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The transaction is an all-stock deal, with upGrad acquiring Unacademy in exchange for shares. Gaurav Munjal, Founder and CEO of Unacademy, will remain with the company to build and focus on Unacademy's core offerings. The valuation under discussion is expected to be lower than the previously reported level of around $300-400 million, which was sharply below Unacademy's peak valuation of $3.4 billion in 2021.

Background and Rationale

The acquisition talks between the two companies collapsed in January, but have since been revived. Unacademy has faced a difficult period over the past two years, with multiple sale discussions failing amid a widening gap in valuation expectations. upGrad has proposed a share-swap deal valuing Unacademy at around $300-400 million, which is significantly lower than its peak valuation.

Operational Changes and Future Plans

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Under the proposed deal, Unacademy's AI-led language learning product Airlearn will be developed within the upGrad ecosystem. Unacademy has also completed a ₹50 crore Esop buyback announced last month, and has consolidated company-operated offline centres with franchise partners, pivoting back to online education products.

Financial Position

As of today, Unacademy has cash reserves exceeding $100 million. The company has undertaken several operational changes to revamp its business and has seen traction in its international expansion plans, particularly with Airlearn.