Houghton Mifflin Harcourt Co (NASDAQ: HMHC) inked an agreement to divest its consumer publishing business, HMH Books & Media, to News Corp (NASDAQ: NWSA) division HarperCollins Publishers for $349 million cash.
The divestiture will help HMH concentrate on K–12 education and drive digital sales, annual recurring revenue, free cash flow, and repay debt. HMH Books & Media generated $192 million in billings during 2020. The company will use the expected divestment proceeds of $337 million for debt repayment.
HMHC reduced the 2021 billings expectations to a range of $905 million to $955 million from the previous range of $1.10 billion to $1.15 billion upon the divestment. The HMH Books & Media employees will join News Corp's trade publishing division HarperCollins under the arrangement.
HMH Books & Media has published renowned novels, nonfiction, cookbooks, and children's books. It also includes innovative production company HMH Productions.
Media and information services company News Corp recently acquired Investor's Business Daily from O'Neil Capital Management for $275 million.
News Corp held cash and cash equivalents worth $1.6 billion as of December 31, 2020.
Price action: HMHC shares traded higher by 23.8% at $7.40 in the premarket session on the last check Monday. NWSA share prices closed lower by 1.85% at $25.72 on Friday.
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