McGraw-Hill Companies (MHP) announced it has signed a definitive agreement to sell its McGraw-Hill Education business to Apollo Global Management (APO) for a purchase price of $2.5B, subject to certain closing adjustments. As part of this transaction, McGraw-Hill will receive $250M in senior unsecured notes issued by the purchaser at an annual interest rate of 8.5%. The transaction, which is expected to close in late 2012 or early 2013, is subject to regulatory approval and customary closing conditions. Upon closing, McGraw-Hill, which will be renamed McGraw Hill Financial. McGraw Hill Financial expects 2012 revenue of approximately $4.4B with nearly 40% from international markets. McGraw-Hill said it will use the estimated proceeds of approximately $1.9B, net of tax and certain closing adjustments, from the sale to sustain its share repurchase program, to make selective tuck-in acquisitions, and to pay off any short-term borrowing obligations. As a result of the transaction, the company anticipates a non-cash impairment charge in Q4 of $450M-$550M relating to the School Education Group.
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