Bloomberg News

McGraw-Hill’s Education Unit Sale Becomes All-Cash Transaction

March 05, 2013

McGraw-Hill Cos. (MHP:US), which agreed in November to sell its education unit to Apollo Global Management LLC, said the transaction is now an all-cash deal.

As part of the sale, the company will receive $150 million in cash instead of $250 million of unsecured notes by a holding company of McGraw-Hill Education, the New York-based firm said in a statement. The sale is expected to close by the end of this month. The company will be renamed McGraw Hill Financial, pending shareholder approval.

Chief Executive Officer Harold “Terry” McGraw III decided to sell the division, which his great-grandfather started 125 years ago, after pressure from Jana Partners LLC, a New York- based hedge fund, and the Ontario Teachers’ Pension Plan with a proposal to spin off the deteriorating education business. McGraw Hill Financial will have Standard & Poor’s, the world’s largest credit rater, at its center.

The company’s shares have tumbled since the Department of Justice sued the unit Feb. 4, alleging it inflated grades on mortgage-backed securities to win business from Wall Street banks. McGraw-Hill has dropped (MHP:US) 19.2 percent to $47.14 since the beginning of last month.

McGraw-Hill’s origins date back to 1888, when James H. McGraw acquired The American Journal of Railway Appliances, according to the company’s website. More than 20 years later, he merged his book-publishing department with John A. Hill’s, creating the McGraw-Hill Book Co. In 2009, McGraw-Hill agreed to sell Businessweek magazine to Bloomberg LP, the parent of Bloomberg News.

To contact the reporter on this story: Matt Robinson in New York at mrobinson55@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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