Learning technology company Houghton Mifflin Harcourt (Nasdaq: HMHC) today announced that it has entered into a definitive agreement to divest HMH Books & Media, its consumer publishing business, to HarperCollins Publishers, a division of News Corp (Nasdaq: NWSA), a global, diversified media and information services company, for a cash purchase price of $349 million.The divestiture enables HMH to focus singularly on K–12 education and accelerate growth momentum in digital sales, annual recurring revenue and free cash flow while paying down a significant portion of its debt.
For nearly two centuries, HMH Books & Media has published some of the world’s most renowned novels, nonfiction, cookbooks and children’s books. HMH publishes celebrated best-sellers such as the popular J.R.R. Tolkien titles, The Best American® series, major cookbook brands such as Instant Pot Miracle and the How to Cook Everything® series, as well as iconic children’s books and characters such as Curious George®, Little Blue Truck, and The Giver. HMH Books & Media also houses HMH Productions, an innovative production company, with expertise across all media platforms that produces TV, film, and interactive media including Carmen Sandiego (an original Netflix series and film) and more.
“At HMH, we are incredibly proud of our legacy, which encompasses nearly 200 years of innovation in trade publishing and education, touching countless teachers, students and readers over time. The divestiture of the HMH Books & Media business allows us to deepen our focus on K–12 education, while also providing our talented consumer publishing colleagues and authors with infrastructure and support to fuel continued growth, champion new stories and continue this legacy,” said Jack Lynch, President and CEO, HMH.
HMH is the largest learning technology company in the K–12 market, serving 90% of the schools, teachers and students in the U.S. “HMH is the leader in not only scale, but in proven, research-based programs informed by learning science—and it is that intersection of learning science and learning technology that sets us apart. There is incredible demand for our expertise as schools across the country plan for post-pandemic learning and recovery,” added Lynch. “This is an inflection moment for K–12 education in our country and for HMH as a trusted partner to schools and teachers in advancing learning for every student.”
As part of the agreement, all HMH Books & Media employees will join HarperCollins, News Corp’s trade publishing division. HMH and News Corp will work closely to provide a smooth transition for employees, customers, authors and illustrators.
The divestiture is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close in the second quarter of 2021.
Updated Outlook
HMH today also updated its full-year 2021 outlook to adjust for the sale. The Company now expects 2021 billings in a range of $905 million to $955 million with an unlevered free cash flow margin in a range of 9% to 11%, reflecting the expected removal of HMH Books & Media from continuing operations. HMH will report the HMH Book & Media business as discontinued operations beginning with the quarter ending March 31, 2021.
HMH Books & Media contributed approximately $192 million in billings to HMH in 2020. HMH expects total net cash proceeds of approximately $337 million, which it plans to use all net proceeds to pay down debt, further aligning the company’s capital structure with its Digital First, Connected strategy.
Advisors
Centerview Partners served as exclusive financial advisor to HMH. Wilmer Cutler Pickering Hale and Dorr LLP acted as HMH’s legal counsel and Milbank LLP acted as HMH’s antitrust counsel.
About Houghton Mifflin Harcourt
Houghton Mifflin Harcourt (NASDAQ: HMHC) is a learning technology company committed to delivering connected solutions that engage learners, empower educators and improve student outcomes. As a leading provider of K–12 core curriculum, supplemental and intervention solutions and professional learning services, HMH partners with educators and school districts to uncover solutions that unlock students’ potential and extend teachers’ capabilities. HMH serves more than 50 million students and 3 million educators in 150 countries, while its award-winning children’s books, novels, non-fiction, and reference titles are enjoyed by readers throughout the world. For more information, visit www.hmhco.com.
About News Corp
News Corp (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. The company comprises businesses across a range of media, including: digital real estate services, subscription video services in Australia, news and information services and book publishing. Headquartered in New York, News Corp operates primarily in the United States, Australia, and the United Kingdom, and its content and other products and services are distributed and consumed worldwide. More information is available at: http://www.newscorp.com.
About HarperCollins
HarperCollins Publishers is the second-largest consumer book publisher in the world, with operations in 17 countries. With 200 years of history and more than 120 branded imprints around the world, HarperCollins publishes approximately 10,000 new books every year in 16 languages and has a print and digital catalog of more than 200,000 titles. Writing across dozens of genres, HarperCollins authors include winners of the Nobel Prize, the Pulitzer Prize, the National Book Award, the Newbery and Caldecott Medals, and the Man Booker Prize. HarperCollins, headquartered in New York, is a subsidiary of News Corp and can be visited online at corporate.HarperCollins.com.
