Digital Scoop India Official Platform of Digital Scoop India Featuring Latest & Best News #Articles #Bytes #Entertainment #DigitalScoopMagazine
Related Articles
Education technology giant BYJU’S has reportedly sent a legal notice to the founders of Aakash Educational Services Ltd (AESL) amid alleged resistance to fulfill a share swap agreement. The development comes after BYJU’S acquired the 33-year-old brick-and-mortar coaching center AESL in a cash and stock deal worth nearly USD 940 million in 2021.
As part of the acquisition, Think and Learn Pvt Ltd (TLPL), operating under the BYJU’S brand, owned 43% of AESL, with BYJU’S founder Byju Raveendran holding an additional 27%. The founder Chaudhry family retained around 18% in AESL, while Blackstone held the remaining 12%.
The initial deal entailed AESL merging with TLPL to achieve enhanced tax efficiency for the seller, the Chaudhrys. However, due to delays in the proposed merger by the National Company Law Tribunal (NCLT), TLPL has invoked an unconditional fallback agreement and issued a notice to the Chaudhry family, demanding the execution of the share swap.
Unfortunately, the minority shareholders of AESL have reportedly declined to swap their equity holdings with TLPL, complicating the acquisition agreement. Around 70% of the acquisition cost was paid in cash, with the remaining amount intended to be adjusted against TLPL’s equity.
Sources suggest that Blackstone and the Chaudhry family communicated their refusal to comply with TLPL’s notice, sent in March, to carry out the share swap as per the original agreement. If the share swap were to be completed, the Chaudhry family’s stake in TLPL would reduce to slightly below one percent.
There are concerns that the Chaudhrys may face demands from tax authorities, including on GST, related to the share swap. As a result, they are reportedly exploring the possibility of a cash payout instead.
BYJU’S has not commented on the matter, and AESL has yet to respond to the queries made by the press.
The share swap was considered a crucial aspect of the acquisition agreement, aimed at achieving tax efficiency for the Chaudhry family, according to sources familiar with the matter. The intention was to facilitate the share swap through a merger of AESL with TLPL.
The ongoing dispute between BYJU’S and the Chaudhry family could have significant implications for both companies as they navigate the complexities of the acquisition terms and tax obligations.
On a separate note, Aakash Educational Services Ltd expects to register a three-fold growth in revenue, reaching ₹3,000 crore by the end of the financial year 2023, since its acquisition by BYJU’S.
The situation remains fluid as the parties involved seek resolution and clarity on the share transfer, and the impact of the dispute on the education technology industry is being closely monitored.
Sources By Agencies
