McGraw-Hill inks deal to sell education arm to Apollo Global for $2.5B

The McGraw-Hill Companies have signed a definitive agreement to sell the McGraw-Hill Education business to  Apollo Global Management, LLC for $2.5 billion. Subject to shareholder approval, upon completion of the deal, McGraw Hill will be renamed McGraw Hill Financial, and will be a “high-growth, high-margin benchmarks, content and analytics company in the global capital and commodities markets.”

“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 in a prepared statement. “We were able to secure an attractive outcome and create additional balance sheet flexibility for McGraw Hill Financial.”  Mr. McGraw will also lead McGraw Hill Financial once the transaction is complete.

“We are excited about this announcement and what it means for McGraw-Hill Education,” added Lloyd G. “Buzz” Waterhouse, President and CEO of McGraw-Hill Education. “Apollo is a leading global alternative investment manager and its affiliated funds have made significant investments in learning companies for more than a decade. McGraw-Hill Education’s expertise and premier brands coupled with Apollo’s resources represent a powerful combination.”

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.”

The company said it plans to use the proceeds from the sale, estimated at $1.9 billion, to fund its stock buyback program, make acquisitions and pay off debt.