The planned acquisition of Unacademy by upGrad has been officially cancelled due to fundamental disagreements over company valuation, marking the end of what could have been a significant consolidation move in India's edtech sector.

Deal Termination Confirmed

Ronnie Screwvala, co-founder of upGrad, confirmed the cancellation on Thursday, stating that the companies were unable to bridge their valuation differences. "We are not proceeding due to valuation differences. While we cannot comment on specific numbers, it is fair to say that we were unable to arrive at a mutually agreeable valuation," Screwvala told NDTV Profit.

Dramatic Valuation Decline

The proposed acquisition would have represented a steep fall in Unacademy's market value. Reports from November indicated that upGrad was set to acquire the edtech platform for a valuation between $300-400 million, a sharp contrast to the company's previous high-water mark.

Previous Funding History

Unacademy's last major funding round occurred in 2021, when it raised $440 million in a round led by Temasek. The funding round included participation from Mirae Asset Venture and notable individual investors including family offices of Oyo founder Ritesh Agarwal and Zomato CEO Deepinder Goyal. This fundraise valued the Unacademy Group at $3.44 billion.

The company's investor base includes prominent global funds:

• SoftBank
• Tiger Global
• Temasek
• General Atlantic

Deal Structure Details

Beyond the main acquisition, the proposed deal included specific arrangements for Unacademy's portfolio companies. The agreement under consideration involved spinning off AirLearn, Unacademy's language-learning application, into a separate venture. Under this structure, upGrad would have had no stake in the spun-off AirLearn entity.

Operational Restructuring

Unacademy has undergone significant operational changes over the past two years as it adapted to post-pandemic market conditions. The company downsized its operations across multiple offerings, focusing resources on its core business to maintain cost efficiency. This restructuring included multiple rounds of layoffs in 2022 as the company realigned its operations to match demand trends that emerged after the pandemic period.

The cancelled acquisition reflects the broader challenges facing India's edtech sector, which experienced rapid growth during the pandemic but has since faced valuation corrections and operational adjustments as market conditions normalized.

Acquisition talks between edtech firms Unacademy and UpGrad have collapsed after months of negotiations, with valuation disagreements proving to be the insurmountable obstacle that ended the potential merger. The development marks the conclusion of extensive discussions between two of India's prominent online education companies.

Proposed Deal Structure and Valuation Gap

The negotiations centered around UpGrad's proposed acquisition of Unacademy at a significantly reduced valuation compared to the company's previous funding rounds. Key details of the proposed transaction included:

The proposed valuation represented a dramatic reduction from Unacademy's peak valuation of $3.40 billion achieved during the funding boom, highlighting the changed market dynamics in the edtech sector.

Leadership Confirmation and Current Status

Ronnie Screwvala, founder of UpGrad, confirmed the collapse of negotiations, stating that the companies decided not to proceed due to valuation disagreements. While specific numbers could not be discussed publicly, Screwvala indicated that the parties were unable to align on valuation expectations. Unacademy Co-Founder Gaurav Munjal did not respond to queries regarding the matter.

Unacademy currently maintains strong financial reserves with approximately ₹1,100.00 crore in cash on its balance sheet. Sources indicate the company is expected to chart its next strategic steps in the coming days following the collapse of these acquisition talks.

Unacademy's Recent Organizational Changes

The failed acquisition talks follow a period of significant transition at Unacademy. Earlier this year, the company underwent a leadership reshuffle where Co-Founders Gaurav Munjal and Roman Saini stepped back from operational roles. Subsequently, Co-Founder Sumit Jain was appointed as chief executive of the core test-preparation business, consolidating leadership around the company's main revenue-generating vertical.

Strategic Refocusing and Cost Management

Over the past two years, Unacademy has implemented several strategic changes to adapt to post-pandemic market conditions:

• Scaled back expansion into multiple categories
• Refocused on core test-preparation offerings
• Undertaken multiple rounds of workforce reductions since 2022
• Implemented cost-cutting measures to align operations with current demand trends

The proposed transaction was expected to focus primarily on Unacademy's test-preparation business rather than its non-core units, but valuation differences ultimately prevented the deal from materializing. This development leaves both companies to pursue independent growth strategies in the evolving edtech landscape.