High-stakes acquisition talks between two of India's leading edtech platforms, Unacademy and UpGrad, have been called off. The negotiations, which could have reshaped the online education landscape, fell apart because the companies could not find common ground on the financial valuation of Unacademy.
Valuation Gap Halts Preliminary Discussions
Ronnie Screwvala, the founder of UpGrad, confirmed the development. He stated that the discussions were at a very early stage and were discontinued after the valuation expectations of both parties did not align. "We were in early discussions, and we could not come to terms on valuation. Both sides felt it was better to stop at this stage," Screwvala said.
Sources familiar with the matter revealed that the proposed deal structure involved Unacademy's investors receiving a minority stake in the merged entity under UpGrad. However, the talks never advanced to a point where final terms or a valuation were agreed upon.
Post-Funding Boom Reality Check
A major sticking point was the significant difference in how Unacademy was being valued. UpGrad was reportedly valuing Unacademy far below its peak valuation achieved during the height of the funding boom in the edtech sector. This substantial gap proved too difficult to bridge, leading to the collapse of the negotiations.
This development occurs against a backdrop of recalibration within the edtech industry, which saw sky-high valuations during the pandemic cool down considerably as offline learning resumed.
Leadership Changes at Unacademy
The failed merger talks also coincide with a period of internal transition at Unacademy. The company recently witnessed significant leadership changes, with its co-founders stepping back from their day-to-day operational roles. Gaurav Munjal, the founder of Unacademy, did not respond to requests for comment on the terminated discussions with UpGrad.
The end of these talks leaves both companies to pursue their growth strategies independently in an increasingly competitive and consolidated Indian edtech market. The episode underscores the challenges of aligning expectations in major mergers, especially when involving high-profile startups navigating a post-boom market environment.
