McGraw-Hill To Sell Education Unit To Apollo For $2.5 Billion

McGraw-Hill agreed on Monday to sell its education division to Apollo Global Management for about $2.5 billion, completing the publisher’s transformation into a provider of high-end financial information.

The long-expected deal will leave McGraw-Hill with its business information operations, which include Standard & Poor’s; a market indexes unit that owns the S.&P. 500 and Dow Jones industrial average; and the metals industry publication Platts.

The newly reborn company, which will be renamed McGraw Hill Financial, is expected to report $4.4 billion in revenue this year, nearly 40 percent of which will come from international operations.

The latest sale will speed up a breakup that was first announced in autumn last year, when McGraw-Hill disclosed plans to spin off its education unit. The publisher was one of many companies to pursue corporate dismemberment plans that were aimed at separating slower-growing businesses from faster-growing ones that would fetch higher values in the stock markets.

The education unit had long been one of McGraw-Hill’s best-known operations, begun with the purchase of an academic publisher in 1952. But its importance to the company has been eclipsed by the faster growth of businesses like Standard & Poor’s, which have benefited from the rise of the financial services sector.

“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,” Harold McGraw III, the company’s chairman and chief executive, said in a statement.

Larry Berg, a senior partner at Apollo, added: “With a longstanding track record of investing behind leaders in education, Apollo is pleased to be acquiring a marquee business that has been a pioneer in educational innovation and excellence for over a century.”

The deal is expected to close as soon as the end of the year. The company will take a noncash charge of about $450 million to $550 million tied to the transaction.

Financing for the deal will come from Credit Suisse, Morgan Stanley, Jefferies, UBS, Nomura and the BMO Financial Group.

McGraw-Hill was advised by Evercore Partners, Goldman Sachs and the law firms Wachtell, Lipton, Rosen & Katz and Clifford Chance.

Apollo was advised by Credit Suisse, UBS and BMO, as well as the law firms Paul, Weiss, Rifkind Wharton & Garrison and Morgan, Lewis & Bockius.


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