In my last article, I mentioned how Allen, just by delaying the Unacademy acquisition talks by a few months, could bring its valuation down to - a song. Well, JC Chaudhary Sir played that game with Byju's. Here's how.
Aakash was acquired by Byju's for almost $1 Bil. 80% of it was cash, 20% was stock. While Byju's had trouble paying its lenders (so much that it took them to court for asking for payments), JC Chaudhary sir got all his money in cash, right in the nick of time. He then bought a new Bungalow at Lutyens for ₹137 Cr. And then a farmhouse in South Delhi for ₹96 Cr. This was right when Byju's offices were getting raided by ED, and it looked like there could be jail terms for some. I picture JC Chaudhary Sir kickin' it in the Carribean, sippin' Pina Coladas with some really nice Barbeque, and dancing his way to the bank, while people's asshes are getting burnt at Byju's offices.
What's the best part? As a part of the agreement, besides the cash, 20% in stock payment to JC Chaudhary Sir was supposed to be a share swap with Byju's. So Chaudharys were supposed to trade their stock in Aakash with Byju's stock at that $22 Bil valuation. And guess what! Chaudharys didn't do it. They simply didn't do it. They took the cash, and kept stalling the share swap till that whole conversation went in a limbo. It's the truth!
Things kept getting worse for Byju's, and Chaudharys kept stalling. Polite follow ups became heated emails, heated emails became legal notices, legal notices became lawsuits with news flying all around. But Chaudharys just didn't care. They kept stalling. Meanwhile, Byju's kept developing new problems of its own which kept growing like wildfire. At the end, Chaudharys won.
The last "unofficial" update on this aspect of the deal was in Oct 2023, saying that the two parties are "closing in" on the share swap. But the terms were new. As of now, even that hasn't been confirmed by anybody. Basically, it didn't happen.
So to cut the long story, JC Chaudhary Sir took the cash from Byju's, but just refused to do the share swap, which was a part of the deal. Thereby avoiding all their problems like a pro. Even after the acquisition, his son came back as the CEO. Haha.
Now why can't Maheshwaris pull off the same? Unacademy is degrowing. Even with all the firing and zero increments to its employees, it's still making losses almost as large as its revenues. The company can clearly not stand on its own. In fact, if not Allen, who else will even acquire Unacademy under the circumstances? And then there's the valuation of $800 Mil?
If Maheshwaris keep stalling, Unacademy's problems will keep growing, and there'll come a time when all that will come up in its valuation conversation. After all, Allen is itself worth about $1.5 Bil only. Why would it absorb an $800 Mil cash guzzler on steroids?
I don't know how all this will pan out. But maybe JC Chaudhary Sir does. After all, he's a renowned numerologist. Sees the future in a crystal ball...
But whatever happens, the above deals could be the most interesting deals in the Indian business ecosystem. Definitely worthy of a book, or a movie.
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