Byju's Sends Legal Notice To Aakash Founders Asking To Share Transfer While BYJU'S declined to comment on the situation, sources have reportedly revealed that the share swap was a critical aspect of the acquisition agreement
By Teena Jose
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Education technology startup Think and Learn Pvt Ltd, which operates under Byju's brand name, has sent a legal notice to founders of Aakash Educational Services following their alleged resistance to complete a share swap that was unconditionally agreed as part of the sale of Aakash Educational Services Ltd (AESL) that was part of the 2021 acquisition deal, according to media reports.
Reportedly, BYJU'S acquired AESL, a 33-year-old brick-and-mortar coaching center, for nearly $940 million in a cash and stock transaction. Post-acquisition, Think and Learn Pvt Ltd (TLPL) owned 43% of AESL, with founder Byju Raveendran holding another 27%, and the Chaudhry family maintaining approximately 18 per cent, while Blackstone held the remaining 12%.
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.
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% of the 2021 acquisition was made in cash, and the rest was meant to be adjusted against the equity of TLPL.
However, they are reportedly considering a cash payout instead of the swap, which could potentially lead to demands from tax authorities, including on Goods and Services Tax (GST).
While BYJU'S declined to comment on the situation, sources have reportedly revealed that the share swap was a critical aspect of the acquisition agreement. The original intention was to achieve the share swap through a merger of AESL with TLPL, providing enhanced tax efficiency for the Chaudhry family
