Unacademy, once valued at Rs 28,800 crore ($3.4 billion), is reportedly in advanced merger discussions with Allen Career Institute, according to the Economic Times.

The potential deal would value the Bengaluru-based EdTech start-up at Rs 6,776 crore ($800 million), a sharp decline reflecting the industry’s recalibration after the pandemic boom.

Insiders suggest that while negotiations are progressing, approval from Allen’s promoters, the Maheshwari family, remains a key hurdle.

The merger could consolidate two major players in a sector grappling with reduced investor interest and slower growth, especially in the wake of financial scandals involving BYJU’S.

As reported by the Economic Times, Unacademy’s pivot from online education to physical coaching centres — initiated after the demand for online learning dwindled — led to flat revenues, layoffs, and leadership exits.

The company, founded by Gaurav Munjal, Roman Saini, and Sumit Jain, holds Rs 1,355 crore ($160 million) in cash reserves, a contentious point in valuation talks.

Allen, headquartered in Kota and backed by Bodhi Tree Systems, reported Rs 2,277 crore in revenue with Rs 427 crore in profit for Financial Year ‘23. According to the Economic Times, this deal could bolster Allen’s digital strategy while offering Unacademy stakeholders a stake in a profitable venture.

Unacademy’s leadership, including its founders, is expected to exit if the merger proceeds. Observers view this potential merger as a crucial moment for the EdTech sector, which is navigating challenges like layoffs and investor caution post-COVID-19.