Home » Industry » Education » McGraw-Hill to Sell Education Business to Apollo for $2.5 Billion

McGraw-Hill to Sell Education Business to Apollo for $2.5 Billion

After a year of planning and speculation the news is finally out:   The McGraw-Hill Companies (NYSE: MHP) (“the Company”) announced it has signed a definitive agreement to sell its McGraw-Hill Education business to investment funds affiliated with Apollo Global Management, LLC (NYSE: APO) (collectively with its subsidiaries, “Apollo”), for a purchase price of $2.5 billion, subject to certain closing adjustments.   As part of this transaction, McGraw-Hill will receive $250 million in senior unsecured notes issued by the purchaser at an annual interest rate of 8.5%.  The transaction, which is expected to close in late 2012 or early 2013, is subject to regulatory approval and customary closing conditions.

Upon closing, McGraw-Hill, which will be renamed McGraw Hill Financial (subject to shareholder approval), will be a high-growth, high-margin benchmarks, content and analytics company in the global capital and commodities markets.  With customers in more than 150 countries, McGraw Hill Financial expects 2012 revenue of approximately $4.4 billion with nearly 40% from international markets.  The Company will provide 2013 financial guidance for McGraw Hill Financial when it announces its 2012 fourth quarter and year-end financial results.

Beginning in the fourth quarter of 2012, the Company will classify and report results of McGraw-Hill Education as discontinued operations.  As a result of this transaction, the Company anticipates a non-cash impairment charge in the fourth quarter of approximately $450 to $550 million relating to the School Education Group.

McGraw-Hill Education was a major drag on corporate financial results.  Hopefully, the newly spun-off entity will be able to grow and prosper without being measured on the benchmark performance of the McGraw-Hill Financial Market units.

To read the full release click on the link

Leave a Reply