McGraw-Hill To Sell Education Biz to Apollo Global For $2.5 Bln.
McGraw-Hill Companies (MHP) has agreed to sell its education business to Apollo Global Management LLC (APO) for $2.5 billion. The deal is expected to close late 2012 or early 2013.
McGraw-Hill expect proceeds of about $1.9 billion from the sale, after tax and closing adjustments, which it plans to use for share buyback, to make "selective tuck-in acquisitions" that will improve its financial business portfolio, and to pay off short-term debts.
From the fourth quarter of 2012, McGraw-Hill will classify its education unit results as discontinued operations. The company expects to record a non-cash impairment charge of $450 million to $550 million in the fourth quarter.
The New York-based company now expects to grow through its financial segment, which includes brands such as credit rating services Standard & Poor's, S&P Dow Jones Indices, Platts, energy and metals market information services, and McGraw-Hill Construction.
Last year September, McGraw-Hill, after being pressurized by its investors, approved a split into two public companies, one focusing on financial services and the other - education business.
The company's shareholders stand was a split would maximize shareholder returns and improve its margins to levels comparable to the company's industry peers. Investors had then stressed that McGraw's business were "wholly unrelated," posing questions about the company's "logic for keeping any of these businesses together."
McGraw-Hill had plans to spin-off of the education business to its shareholders, but after considering options the company reached an agreement to sell the business.
Chief Executive Harold McGraw said, "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 favorably position the world-class assets of McGraw-Hill Education for long-term success."
MHP is currently trading at $52.74, up $1.06 or 2.04 percent, on a volume of 2.51 million shares on the NYSE.
APO is currently trading at $15.29, down $0.04 or 0.26 percent, on the NYSE.
For comments and feedback: editorial@rttnews.com