News

26 November 2012 | Education | Apollo Group Inc. | McGraw Hill Education

McGraw-Hill Education Unit to be sold to Apollo Global Management

The Education Unit of McGraw-Hill is to be sold to Apollo Global Management for $2.5bn, capping a process that took more than a year.

The sale ends a previously announced plan by McGraw-Hill to take the education unit public. McGraw-Hill said in September 2011 that it intended to hive off its education unit from its financial services business, whose holdings include its well-known Standard & Poor's bond-rating service. While it pursued a possible spinoff, it also conducted a sale process.

After reviewing final offers--including one from private-equity firm Apax Partners, the majority owner of Cengage Learning- McGraw-Hill entered into exclusive talks with Apollo in November. Apollo was the highest bidder.

"After carefully considering all of the options for creating shareholder value, the McGraw-Hill Board of Directors concluded that this agreement generates the best value and certainty for our shareholders and will most favourably position the world-class assets of McGraw-Hill Education for long-term success," said Harold McGraw III, chairman, president and chief executive of McGraw-Hill Cos., in a statement.

The final sale price is lower than McGraw-Hill had once hoped to get for its education business, reflecting the continued difficulties of the education business in general. On the K-12 front, states have cut back significantly on their textbook spending because of the difficult economy while the higher education business is undergoing a digital transition that has attracted a number of aggressive new companies offering educational products and services.

McGraw-Hill Education generated $836m in revenue for the third quarter, ended 30 September, down 11% from the year-earlier period, and operating profit declined 20% to $253m. In addition to a weak K-12 market, McGraw-Hill Education said that revenue at each component of its higher education, professional and international group had declined during the quarter.

Apollo, however, sees opportunities to bolster the McGraw-Hill Education brand as education takes on a more technological profile.

"We look forward to leveraging the company's leading portfolio of trusted brands and innovative digital learning solutions to drive growth through the on going convergence of education and technology on a global basis," said Larry Berg, senior partner at Apollo, in a statement.

The deal is expected to close late next month or in early 2013, pending regulatory approval. After the sale is completed, McGraw-Hill is changing its name to McGraw Hill Financial. It is projecting 2012 revenue of about $4.4bn. Mr.McGraw will run the new company.   ‚Äč

knowledge base

 

The Business of Education

An analysis of recent deals including an up to date exit valuation of MPW.

Selling your company - how to get it right

Selling your company is likely to be a once in a lifetime experience. It is essential you get it right.

More →

Services

 

Our expertise

Deal origination - acquisitions - We help quoted companies and private equity houses source acquisitions in the UK and overseas.

Deal origination - disposals - We help owners of companies wishing to dispose of their business.

IPO advice - We provide strategic, financial and valuation advice to companies considering an IPO.

Valuation - We undertake valuations for ESOP transactions, employee share schemes and for a wide range of fiscal, legal and commercial purposes.

Our sectors

Our corporate finance skills can be employed in a wide range of sectors. We have a particular strength in animal health, education, outsourcing, IT, data analytics and financial publishing.

More →