McGraw-Hill Cos. announced that it will split into two separate public companies. One company will include the Standard & Poor’s index and ratings business unit and will focus on the capital and commodities markets; the other company will include the textbook publishing and education units.
Activist investors Jana Partners LLC, a hedge fund, and the Ontario Teacher’s Pension Fund had called for a breakup of the company, according to news reports. Revenue for the education unit fell during the past three quarters,
Reuters reported.
McGraw-Hill expects to spin off the education group by the end of 2012. The split will be treated as a tax-free spinoff of the education business.
The
New York Times’
“DealBook” column noted
that the company also said it would cut costs and repurchase $1 billion worth of shares this year.
Chairman and CEO Terry McGraw, a great-grandson of the founder, will head McGraw-Hill Markets, which in addition to Standard & Poor’s will include energy industry data provider Platt’s and research service J.D. Power and Associates. Its 2011 revenue is expected to be $4 billion, the
Times
article said.
The Reuters report noted that McGraw Hill has been publishing college textbooks since 1927.
McGraw-Hill Education is expected to generate $2.4 billion in revenue this year, the
Times
report noted. The unit’s current president, Robert Bahash, will continue in that role until the company can find a new head, the article said. (Sources: Reuters, Sept. 12, 2011;
New York Times,
Sept. 12, 2011.)
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