Byju’s Targets Us Acquisition, Likely To Bid For Chegg Inc. Or 2u. Details here
Byju’s, an Indian online education start-up, is in talks to acquire a US target and is likely to bid for Chegg Inc. or 2U Inc., according to people familiar with the matter.
The Bangalore-based company has held talks with Santa Clara, Calif.-based Chegg and Lanham, Maryland-based 2U and the total value of a deal could be around $2 billion, reports said. said the people, who asked not to be named due to the sensitivity of the negotiations. Chegg’s market value was $2.3 billion as of Friday’s close, while 2U had a market value of $756 million and more than $1 billion in debt and other liabilities.
Byju’s and its bankers are evaluating the finances of the two companies and aim to make an offer in the coming weeks, one of the people said. They have yet to agree on a final price and it’s possible no deal will ultimately materialize, the people said.
Byju’s declined to comment, while Chegg and 2U did not respond to requests for comment. Byju’s, one of the world’s most valuable startups with the backing of Tiger Global Management and Mark Zuckerberg’s Chan Zuckerberg Initiative, is looking to capitalize on a global market rout and grow its business through acquisitions , said one of the people. Both Chegg and 2U saw their shares fall more than 75% from July to Friday’s market close.
The Indian education pioneer is the country’s most valuable startup, with a valuation of $22 billion, according to market researcher CB Insights. Its backers also include Silver Lake Management, Naspers Ltd. and Mary Meeker’s Bond Capital.
Byju’s, whose parent company is and officially known as Think & Learn Pvt, has already lined up contingent debt commitments of more than $1 billion to fund the acquisition from banks including Morgan Stanley and JPMorgan Chase. & Co. and Goldman Sachs Group Inc. said the persons. Representatives of the banks declined to comment.
Bloomberg News reported last week that the company was in talks with lenders to raise more than $1 billion in acquisition financing.
Byju’s, founded by former teacher Byju Raveendran in 2015, has already led a wave of consolidation in online education. Last year, it bought US reading platform Epic for $500 million, Singaporean service Great Learning for $600 million, US coding site Tynker for $200 million and Austrian math operator GeoGebra for around $100 million.
“We’re seizing the opportunity to create a really big edtech company for the world,” Raveendran told Bloomberg News last year.
A deal for Chegg or 2U would further accelerate Byju’s growth by giving it access to tens of millions of students in the lucrative higher education segment.
Founded by a group of Iowa State University students in 2005, Chegg began as a low-cost textbook rental service for college students. He then raised $187 million in an initial public offering in 2013 and turned to online courses and tutoring.
Chegg was part of a generation of pandemic-era darlings from Peloton Interactive Inc. to Zoom Video Communications Inc. that surged in 2020 after investors bet on fundamental shifts in consumer behavior. But the edtech company, which competes with Coursera Inc., crashed in 2021 after enrollments slumped and U.S. economic growth slumped, prompting Chegg to cut its revenue forecast and warn of uncertain growth prospects.
2U, founded in 2008, is the parent company of the online learning platform edX. The company provides tools to universities around the world to design and deliver e-learning programs.
Byju’s has also charted its own course to public markets. The Indian edtech startup has been in talks with several Special Purpose Acquisition Companies, or SPACs, about a possible US listing, which is still under consideration, the people said.