Byju’s, the online education that started in India, discusses acquiring U.S. companies 2U Inc. or Chegg Inc., as per informed sources.
More on the possible acquisition
In Lanham, Maryland, the Bangalore-based ed-tech firm has held talks with Chegg, based out of Santa-Clara, California, and 2U. The deal is valued at $2 billion, according to people who did not wish to be named.
2U has a market value of $756 million with $1 billion-plus debts and other liabilities, while Chegg’s market capitalization was $2.3 billion after Friday’s close.
Byju’s, along with its bankers, is evaluating the two companies’ financials and proposes making an offer in the coming weeks. They have not yet agreed on the final price, and it is also possible that the deal may not materialize.
2U and Chegg did not respond to comment requests, while Byju’s declined to comment. Both 2U and Chegg’s share prices have tumbled by more than 75% from July to Friday’s last closing.
Biju’s is one of the biggest start-ups globally today, backing from Chan Zuckerberg Initiative and Tiger Global Management. They are looking to capitalize on the global market route and build a business via acquisitions. The Indian online education pioneer has a valuation of $22 billion as per market research firm C.B. Insights. Other investors include Mary Seeker’s Bond Capital, Naspers Ltd, and Silver Lake Management.
Byju’s, which is the brand name of the parent company Think & Learn Pvt. Ltd, has lined up debt commitments from banks such as JP Morgan Chase & Co, Morgan Stanley, and Goldman Sachs Group inc. for more than $1 billion to finance the acquisition of the U.S. firms.
Bloomberg News had reported earlier that the company was in talks with lenders to raise $1 billion for acquisition financing.
Biju’s was founded in 2015 by a former teacher, Biju Raveendran. It has been leading an online education consolidation wave. Last year, it acquired Epic, a U.S. reading platform, for $500 million, a U.S. coding site Tynker for $200 million, Australian mathematics operator GeoGebra for around $100 million, and Singapore’s Great learning for $600 million.
Raveendran told Bloomberg that Byju wants to create the largest ed-tech company globally, taking advantage of the opportunity. A deal with 2U or Chegg will ensure Byju’s growth is turbocharged with access to millions of students in the higher education segment that is considered lucrative.
Chegg was founded in 2005 by a group of students from Iowa State University as low-priced textbook rental services for college students. In 2013, it raised $187 million in its IPO and diverted to online tutoring and coursework. The edtech firm slumped in 2021 after the pandemic subsided with the downsizing of its revenue forecast and uncertain growth outlook.
2U was founded in 2008 and is the parent company of the online learning platform edX, which supplies universities globally with tools to design e-learning curricula.
