According to the media reports, SoftBank-backed Unacademy is in talks to merge with Byju’s-owned Aakash, portending a huge shakeup involving two of India’s most valuable edtech companies.

According to media reports, the purchase, if it goes through, will be a mix of cash and shares, with the amalgamated firm considering an IPO (initial public offering) rather than Aakash alone seeking a public listing, as Byju’s is doing presently.

The discussions are at an early stage and a transaction may not materialise but events have moved far enough for talks to take place over the last month between Byju’s founder Byju Raveendran and Unacademy founder Gaurav Munjal, reports added.

The two Bengaluru-based startups are rivals in the hyper-competitive edtech space, but they are backed by a bevy of common investors, among them General Atlantic, Tiger Global and Sequoia Capital. With new funding scarce and new competitors gaining ground, such as Noida-based PhysicsWallah, a merger involving strong elements from their portfolio would allow investors to give Byju’s and Unacademy a better chance of fending off competition.

While Byju’s raised its last equity funding round in October 2022 at a flat $22 billion value, Unacademy last received $440 million in August 2021, at a valuation of $3.4 billion. Unacademy has raised over $870 million to date, while Byju’s has raised over $5 billion.

The prospective merger comes even as Byju’s is in talks with bankers to list Aakash on the public bourses in India and is aiming for a valuation of $3-4 billion. According to reports, Aakash earned revenue of roughly Rs 1,400 crore in FY22 (2021-22) and is likely to exceed the Rs 2,500 crore barrier this year, with a $3 billion valuation giving it a 10x revenue multiple.

If the acquisition is completed, Unacademy and Aakash will form one of India’s largest coaching organisations, with strong footholds in both offline and online exam preparation segments. Unacademy currently boasts approximately 50 million active learners, whereas Aakash has over 2,50,000 students across its 200 centres in India.

Byju’s purchased Aakash Educational Services in April 2021, just before the second wave of Covid swept through India, closing schools, colleges, and physical tuition centres that had only recently begun to reopen following the first round. Byju’s agreed to pay $950 million for the stock and cash transaction.