McGraw-Hill to Sell Education Business to Apollo for $2.5 Billion

McGraw-Hill  is to sell its McGraw-Hill Education business to Apollo Global Management for $2.5 billion.  Earlier reports suggested that McGraw-Hill had hoped to achieve a $3 billion sale.

McGraw-Hill announced a restructuring program in September 2011. After the sale of the education business McGraw-Hill will becoming a more focused financial services company and will change its name to McGraw-Hill Financial,

“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,” said Harold McGraw III, Chairman, President and CEO of The McGraw-Hill Companies who will lead McGraw Hill Financial once the transaction is complete.  “We were able to secure an attractive outcome and create additional balance sheet flexibility for McGraw Hill Financial.”

The Company will use the estimated proceeds of approximately $1.9 billion, net of tax and closing adjustments, to “sustain its share repurchase program, to make selective tuck-in acquisitions that enhance McGraw Hill Financial’s portfolio of powerful brands, and to pay off any short-term borrowing obligations.”

McGraw-Hill received financial advice from Evercore Partners and Goldman, Sachs & Co., and legal advice from Wachtell, Lipton, Rosen & Katz and Clifford Chance.

Apollo received financial advice from Credit Suisse, UBS Investment Bank and BMO Financial Group.  The financing is provided by Credit Suisse, Morgan Stanley, Jefferies, UBS Investment Bank, Nomura and BMO.  Apollo received legal advice from Paul, Weiss, Rifkind, Wharton & Garrison LLP and Morgan, Lewis and Bockius LLP.

USA, New York, NY

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