Edtech unicorn Byju’s has held talks to acquire California-based online tutoring company Chegg, people in the know of the talks said.
In an exclusive interview with ETtech, Byju Raveendran, the company’s founder and chief executive, did not confirm discussions to buy Chegg, which was founded by Osman Rashid and Aayush Phumbhra in 2005 and has a current market capitalisation of $2.2 billion.
However, Raveendran said the next twelve months will be the best time to acquire companies. “We have made large, multi-hundred-million-dollar, acquisitions. Globally, we would have made four out of the top ten edtech acquisitions,” he said. “We are looking at large multi-billion dollar acquisitions … that’s why we are accessing all kinds of capital. We are exploring acquisitions in the US.”
This is a good time to consolidate as companies are available at valuations that are attractive, he said.
Byju has also been pursuing a public listing in the US through a special purpose acquisition company (SPAC), which is a company founded for the purpose of acquiring or merging with another company. According to people familiar with the matter, if it buys Chegg, a publicly-traded company in the US, it may also help the edtech firm go public.
“This (listing through a reverse merger with Chegg) is not the route to go public in the US,” Raveendran said, without confirming any acquisition talks.
“We will close the acquisition and if we are still doing an IPO in the US, we will do a SPAC. We are still thinking of an IPO in around 9-12 months and if it’s in the US, then it would be through a SPAC,” he said. But there have been doubts raised on its SPAC plan, amid a wider market crash and SPACs going out of favour.
Byju’s has been on a buying spree recently. It paid $500 million in cash and stock for US-based kids learning platform Epic, $600 million for Greater Learning, $200 million for coding site Tynker, and $150-$200 million for Austria-based GeoGebra last year.
The development comes at a time when Raveendran is looking to increase his ownership in Bengaluru-based Byju’s. Raveendran and his family hold more than 25% in Byju’s, among the highest for an Indian founder. This is expected to up to around 28% once his personal investment in the company is closed.
Source: Economic Times