BYJU'S Sends Notice To Aakash Founders Seeking Share Transfer

Education technology startup Think and Learn Pvt Ltd, operating under BYJU'S brand name, has sent a notice to Aakash Educational Services' founders following their alleged resistance to complete a share swap that was unconditionally agreed as part of the sale of Aakash Educational Services Ltd (AESL), according to sources.

In 2021, BYJU'S acquired 33-year-old brick-and-mortar coaching centre AESL for nearly $940 million in a cash and stock deal. Post deal, TLPL owned 43 per cent while its founder Byju Raveendran another 27 per cent. Founder Chaudhry's family maintains about 18% in AESL and Blackstone the remaining 12, according to a PTI report.

The deal envisaged AESL merging with TLPL as it was more tax efficient for the seller Chaudhrys.

However, due to delays in the proposed merger by the National Company Law Tribunal (NCLT), TLPL has invoked the unconditional fallback agreement and issued a notice to Chaudhrys, requesting the execution of the swap deal, stated the PTI report.

But the minority shareholders have declined to swap their equity holding in AESL with the firm's parent TLPL, three sources aware of the matter said.

Around 70 per cent of the 2021 acquisition was made in cash, and the rest was meant to be adjusted against the equity of TLPL.

Sources said Blackstone and the Chaudhry's family have written to BYJU'S in the last few weeks, declining to comply with a TLPL notice sent in March to execute the share swap as per the original agreement, added PTI report.

Upon completion of the existing share swap obligation, the Chaudhry family's stake in TLPL would be slightly below one per cent, PTI reported.

Chaudhrys could face demands from the tax authorities, including on GST, in the swap deal, they said, adding that Chaudhrys are eyeing a cash payout instead of a swap.

BYJU'S declined to comment on the development while the query sent to AESL did not elicit any reply.

Sources said the share swap was an integral part of the acquisition agreement. The intention was to affect the share swap through a merger of AESL with TLPL, allowing for enhanced tax efficiency for the seller, Chaudhrys, they added.