The Chaudhry family, founders of Aakash Educational Services Limited (AESL), has informed BYJU’S about their decision to terminate the merger and fallback agreement that involved a share swap. As per a report from The Morning Context, the Chaudhrys have declined to exchange their remaining 18% stake in Aakash for equity in BYJU’S.
Blackstone Also Delays Share Swap Plans
Simultaneously, Blackstone, the US-based private equity firm, has also postponed its progress with the share swap. Blackstone currently holds a 12% equity stake in Aakash.
Legal Obligations and Disagreements
Despite these developments, sources close to BYJU’S assert that Aakash is legally obligated to fulfill the share swap, in accordance with the agreement that led to BYJU’S acquiring the test prep chain in April 2021.
Aakash Boardroom Tussle and Financial Allegations
The termination of the share swap comes amidst a boardroom dispute within Aakash. Davidson Kempner, a lender to the startup, accused the company of violating a loan covenant and demanded repayment of funds accessed from a $250 million credit line. Media reports suggested that Davidson Kempner assumed control of the startup and restructured its board, but both Davidson Kempner and BYJU’S denied these claims.
BYJU’S-Aakash Merger: A Complex Journey
BYJU’S acquired Aakash in a deal worth nearly $1 billion in April 2021. The acquisition involved a combination of cash and shares, with the Chaudhry family selling the startup to BYJU’S parent company. Delays in obtaining approval for the merger by the National Company Law Tribunal led to BYJU’S invoking a fallback agreement. BYJU’S is working to resolve the share swap issue. The Chaudhry family, Blackstone, and BYJU’S disagree, adding complexity. The high-profile edtech merger’s future is uncertain. All parties are navigating challenges from regulations and financial disagreements.
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