Edtech major upGrad is nearing a deal to acquire Unacademy in an all-stock transaction that would value the Bengaluru-based edtech company at about Rs 2,055 crore ($218 million), according to the Economic Times report.
The proposed valuation marks a steep decline of more than 90% from Unacademy's peak valuation of $3.4 billion during the pandemic-era funding boom in 2021.
The report said that the transaction is expected to be structured as a share swap, with binding agreements likely to be signed in the coming days. upGrad is also expected to seek approval from the Competition Commission of India this week.
Unacademy is likely to have between Rs 900 crore and Rs 950 crore in cash on its books at the time of closing, a factor seen as attractive for the acquiring company, the report said.
'The binding agreements will be signed over the next few days and the application for CCI approval will be submitted in the coming week,' according to the report.
Unacademy co-founder Gaurav Munjal is expected to remain as CEO after the deal, having earlier indicated that AI would play a central role in the company's next phase.
Unacademy has raised roughly $830 million-$880 million from investors including Temasek, Peak XV Partners and Elevation Capital. upGrad, meanwhile, has raised about $330 million and was last valued at about $2 billion.
Temasek is a common investor in both companies, holding around 22% in upGrad and about 5% in Unacademy.
Separately, upGrad is in talks to raise an internal funding round of about Rs 375 crore from existing backers, including Temasek.
Founded in 2010 as a YouTube channel, Unacademy evolved into a full-scale edtech platform in 2015. In recent years, it expanded into offline coaching centres before reversing course to focus on a more capital-efficient, franchise-led model.
The company has also undertaken measures to improve its financial position, including a Rs 50 crore employee stock ownership plan buyback and exiting company-operated offline centres.