Allen Institute in talks to acquire Unacademy for $800 million: Report

Allen Career Institute is reportedly in advanced talks to acquire Unacademy, a prominent edtech startup in India, for $800 million. This would mark a significant decrease from Unacademy's valuation of $3.4 billion in 2021, as reported by The Economic Times.

The merger has been under negotiation for several months and hinges on approval from Allen's promoters, the Maheshwari family. Investment banks are currently determining the share swap ratio, which will decide the equity offered to Unacademy shareholders. The discussions also involve potential cash payouts for Unacademy's founders and early investors, according to the report. The share swap ratio will specify the number of shares the acquiring company, in this case Allen, will grant for each share of the target company, Unacademy.

If finalised, the deal would be one of the largest consolidations in India's edtech sector. The $800 million valuation includes Unacademy's cash reserves of $160 million. Discussions are being led by Bodhi Tree, an Allen investor, and Unacademy cofounder Gaurav Munjal.

Post-merger, Unacademy's founding team, including Gaurav Munjal, Roman Saini, and Sumit Jain, are expected to leave the company. This follows the departure of CTO Hemesh Singh earlier this year. Unacademy has been implementing cost-cutting measures over the past year, including the layoff of 250 employees in July and the exit of several top executives amidst restructuring efforts.

Earlier this year, Unacademy CEO Gaurav Munjal faced backlash on social media after a virtual town hall where he announced that employees would not receive appraisals this year. Adding to the controversy, Munjal delivered the disappointing news while wearing a $400 Burberry T-shirt, a detail that didn’t go unnoticed online.

During the town hall, Munjal explained that while Unacademy had shown above-average performance in 2024, the company fell short of its growth targets, making it necessary to halt appraisals. However, critics online pointed out the perceived insensitivity of making such an announcement while sporting luxury attire.