Apollo Global Management Purchases McGraw-Hill Education for $2.5 Billion

NEW YORK — McGraw-Hill Education has recently announced the sale of its company to Apollo Global Management for nearly $2.5 billion. As part of the sale, McGraw-Hill will receive $250 million in senior unsecured notes an annual interest rate of 8.5 percent.

McGraw-Hill Education provides educational materials, information and solutions for Pre-K to 12th grade, higher education, assessment and professional markets. In light of the transaction, the remainder of the company will be renamed into McGraw-Hill Financial, which will be a high growth, high margin content and analytics company in the global capital markets and commodity markets. The transaction is expected to close in late 2012 to early 2013.

"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 who will lead McGraw Hill Financial once the transaction is complete. "We were able to secure an attractive outcome and create additional balance sheet flexibility for McGraw Hill Financial."

Although McGraw-Hill will no longer have its education sector — the company is still thriving, especially with the growth of McGraw-Hill Financial. McGraw-Hill Financial expects 2012 revenue of approximately $4.4 billion with nearly 40 percent from international markets. The company will use the estimated proceeds of approximately $1.9 billion, net of tax and certain closing adjustments, from this sale to sustain its share repurchase program, to make selective tuck-in acquisitions that enhance McGraw Hill Financial’s portfolio of powerful brands, and to pay off any short-term borrowing obligations, according to a statement.

“As we begin the next chapter in our rich history, I am very proud of and grateful to all the McGraw-Hill Education professionals who are contributing so much to the company and to educators, administrators and students all over the world. I look forward to seeing their continued success with the expertise and support of Apollo,” said McGraw.

Those at Apollo are excited and eager about the purchase and see it as a business investment going forward.

"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,” said Larry Berg, senior partner and Apollo. “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."