Unacademy in talks over $800-mn sale to Allen Career Institute, valuation slashed: Report

Unacademy has managed to control its losses, but its revenue has remained flat. On the other hand, Allen, while profitable, has seen a significant dip in its business due to struggles within the Kota coaching ecosystem.

Unacademy has been in extended discussions with offline test preparation centre Allen Career Institute for a potential sale that could value the edtech firm at $800 million, a sharp decline from its peak valuation of $3.4 billion, according to a report by The Economic Times.

The ongoing negotiations, which is on for several months, are contingent on final approval from Allen’s promoters Maheshwari family. Sources close to the matter told ET that while other stakeholders are inclined to move forward, the key to the deal hinges on securing the Maheshwari brothers' approval for merging Unacademy with Allen.

Investment banks from both sides have been involved in the discussion, and the merger, if it proceeds, would mark a significant consolidation in the edtech sector. The sector has been grappling with a post-Covid slowdown, compounded by the after-effects of Byju's bankruptcy and financial irregularities allegations. Unacademy, based in Bengaluru, has also faced challenges, pivoting to an offline model after operating as an online-only platform for nearly a decade.

“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 negotiations are also yet to settle on the potential cash pay-outs to Unacademy’s founders and early investors.

Unacademy has managed to control its losses, but its revenue has remained flat. On the other hand, Allen, while profitable, has seen a significant dip in its business due to struggles within the Kota coaching ecosystem.

The valuation being discussed for Unacademy includes its cash balance of around $160 million, which has become a point of contention between the two parties. This cash balance is being excluded from Unacademy’s enterprise valuation, sources said.

Emails sent to Allen founder-director Rajesh Maheshwari and CEO Nitin Kukreja did not receive a response, while Unacademy co-founder and CEO Gaurav Munjal also did not respond to The Economic Times request for comment. Moneycontrol could not independently verify the report.