McGraw-Hill Education to be acquired by Apollo Global Management

Larry Berg, senior partner of Apollo said, “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. McGraw-Hill Education has a deep and impassioned management team, and we share their enthusiasm and strategic vision for the business. We look forward to leveraging the company’s leading portfolio of trusted brands and innovative digital learning solutions to drive growth through the ongoing convergence of education and technology on a global basis.”

MHC hopes to complete the deal before the end of 2012 or in early 2013 (first quarter). MHC was under pressure to improve its share prices that’s why it began exploring ways to divest itself of the education and publishing group in September 2011 to focus on its financial businesses. The original plan had involved spinning off MHE into its own company, but MHC also talked to a number of potential suitors before signing the deal with Apollo.

After the purchase is completed, the education group will be known as McGraw-Hill Education under the direction of Llyod G. Waterhouse who was named president and chief executive officer in June 2012. New York City will remain the corporate office for the publishing company.

McGraw-Hill Education is a leading global provider of educational materials, information and solutions for the Pre-K through 12th grade, Assessment, Higher Education and Professional markets.

Hampered by a weak performance in its school group, sales at MHE were down 10% for the nine month period ended September 30, with operating profit off 13%, to $245 million. Ahead of the sale, MHC had initiated a cost reduction program across all of its companies to cut expenses, a move that MHC said reduced costs by 9% in the third quarter alone.