Education startup BYJU’S, also known as Think and Learn Pvt Ltd (TLPL), has sent a legal notice to the founders of Aakash Educational Services (AESL) due to a disagreement over a share swap. Back in 2021, BYJU’S acquired AESL, a well-established coaching center, for almost USD 940 million in a mix of cash and stock.

After the acquisition, TLPL held 43% of AESL, Byju Raveendran (the founder) had 27%, the Chaudhry family retained about 18%, and Blackstone owned the remaining 12%. As part of the deal, AESL was supposed to merge with TLPL, making it more tax-efficient for the Chaudhry family, who were the sellers.

However, delays in the merger approval by the National Company Law Tribunal (NCLT) led TLPL to invoke an unconditional fallback agreement and send a notice to the Chaudhry family, asking them to complete the share swap. Unfortunately, the minority shareholders declined to exchange their AESL equity with TLPL, as per the original agreement.

Around 70% of the acquisition amount was paid in cash, while the remaining portion was intended to be adjusted against TLPL’s equity. The Chaudhry family’s stake in TLPL would have been slightly less than one percent upon fulfilling the share swap obligation.

The Chaudhry family might face tax-related demands, including on GST, in connection with the swap deal. It is speculated that they prefer a cash payout instead of proceeding with the share swap.

Both Blackstone and the Chaudhry family have informed BYJU’S of their refusal to comply with TLPL’s notice for executing the share swap.

BYJU’S declined to comment on the situation, and AESL has not responded to queries.

The share swap was an essential part of the acquisition agreement, aimed at enhancing tax efficiency for the Chaudhry family, and it involved merging AESL with TLPL.

Aakash Educational Services expects to achieve revenue of Rs 3,000 crore by the end of the financial year 2023, marking an impressive three-fold growth since being acquired by BYJU’S.

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