Byju’s in talks with Chegg, 2U as it weighs US acquisition

MUMBAI: Online education startup Byju’s is in discussions to acquire a US target and is likely to bid for either Chegg Inc. or 2U Inc., according to people familiar with the matter.

The Bangalore-based company has held talks with both Santa Clara, California-based Chegg and Lanham, Marylandbased 2U and the total value of a deal could be about $2 billion, said the people, who asked not to be named because of the sensitive nature of the negotiations. Chegg’s market value was $2.3 billion as of Friday’s close, while 2U had a market value of $756 million and more than $1 billion in debt and other liabilities.

Byju’s and its bankers are evaluating the financials of the two companies and aim to make an offer in the coming weeks, said one of the people. They have yet to agree on any final price and it’s possible no deal will ultimately materialize, the people said.

Byju’s declined to comment. Chegg and 2U did not respond to requests for comment.

Chegg closed 2.9% higher Monday after rising as much as 12%, while 2U finished up 6.8% after climbing as much as 24%.

Byju’s, one of the world’s most valuable startups with backing from Tiger Global Management and Mark Zuckerberg’s Chan Zuckerberg Initiative, is seeking to capitalize on a worldwide market rout and build its business through acquisitions, one of the people said.

Both Chegg and 2U have seen their shares tumble more than 75% from July through Friday’s market close.

Byju’s is the country’s most valuable startup, with a valuation of $22 billion, according to the market researcher CB Insights.

Its backers also include Silver Lake Management, Naspers Ltd., and Mary Meeker’s Bond Capital.

Byju’s, whose parent company is Think & Learn Pvt, has already lined up conditional debt commitments of more than $1 billion to finance the acquisition from banks including Morgan Stanley and JPMorgan Chase & Co. and Goldman Sachs Group Inc. said the people.

Representatives for the banks declined to comment.