India’s homegrown edtech behemoth Think and Learn Pvt Ltd (TLPL) that operates Byju’s has reportedly sent a legal notice to Aakash Educational Services Ltd (AESL) following their alleged resistance to complete a share swap that was unconditionally agreed upon as part of the sale of Aakash back in 2021.
Byju’s acquired $940 million in a cash and stock deal in 2021 according to which TLPL owned 43 percent while its founder Byju Raveendran owned another 27 percent. Chaudhary family members maintain 18 percent, and Blackstone the remaining 12 percent.
The deal envisaged AESL merging with TLPL as it was more tax efficient for the seller Chaudhrys.
However, due to delays in the proposed merger by the National Company Law Tribunal (NCLT), TLPL has invoked the unconditional fallback agreement and issued a notice to Chaudhrys, requesting the execution of the swap deal, PTI reported quoting sources.
But the minority shareholders have declined to swap their equity holding in AESL with the firm’s parent TLPL, three sources aware of the matter said.
Around 70 percent of the 2021 acquisition was made in cash, and the rest was meant to be adjusted against the equity of TLPL.
Sources told PTI that Blackstone and the Chaudhry family have written to Byju’s in the last few weeks, declining to comply with a TLPL notice sent in March to execute the share swap as per the original agreement.
Upon completion of the existing share swap obligation, the Chaudhry family’s stake in TLPL would be slightly below one per cent.
Chaudhrys could face demands from the tax authorities, including on GST, in the swap deal, they said, adding that Chaudhrys are eyeing a cash payout instead of a swap.
Sources said the share swap was an integral part of the acquisition agreement. The intention was to affect the share swap through a merger of AESL with TLPL, allowing for enhanced tax efficiency for the seller, Chaudhrys, they added.
Education firm Aakash expects to close the financial year 2023 with Rs 3,000 crore revenue, thereby registering three-fold growth since its acquisition by Byju’s.
Byju’s declined to comment on the development while the query sent to AESL did not elicit any reply.
According to various reports, New York-based Davidson Kempner Capital Management LP has accused Byju’s of financial misconduct. The American investment firm has reportedly taken control of Aakash Educational Services Ltd from the beleaguered behemoth of Indian edtech.
