For-Profit, Investors, Required, University & College - Written by on Thursday, August 18, 2011 20:02 - 0 Comments

Dealwatch: McGraw-Hill Putting Its Educational Division Up For Sale?

by Ingo Bernhardt on Flickr via Creative Commons

Textbook and education publishing giant McGraw-Hill appears to be putting its education business on the auction block and, perhaps, in the sights of private equity firms that are still hankering for profits from the industry. The education business accounted for 30% of the company’s revenues.

The New York Times reported that McGraw Hill retained investment bank Evercore Partners to explore a possible spin-off.

For years, shareholders and others have complained about the company’s stock performance, arguing that the education business has been a drag on the double-digit growth and profit of the company’s financial unit. The education business and the financial services business at McGraw-Hill have different capital and operational requirements, and create few if any synergies, analysts have said. 

The company has made other recent deals, including putting its TV stations up for sale and selling BusinessWeek to Bloomberg LP for $5 million. With an $11.7 billion market capitalization, McGraw-Hill is one of the biggest targets of activist investors this year.

The Wall Street Journal reports: 

The company is divided into four business divisions, which include the S&P and McGraw-Hill Financial, McGraw-Hill Education and McGraw-Hill Information & Media. The financial division receives royalties from trades based on its S&P 500 and other benchmark indexes.

Mr. McGraw, whose great-grandfather started McGraw-Hill in 1888, took over the company in 1998. The family currently owns about a 4.7% stake in McGraw-Hill.

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