Houghton Mifflin Company to Acquire Harcourt Education and Harcourt Trade Divisions from Reed Elsevier
Monday July 16, 1:32 pm ET
Combined Business Will Be a Preeminent Educational Publisher Well-Positioned to Meet the Evolving Needs of Educators and Students in the Dynamic and Highly Competitive Educational Publishing Business
BOSTON--(BUSINESS WIRE)--Houghton Mifflin Company today announced that it has signed a definitive agreement to acquire the Harcourt Education, Harcourt Trade and Greenwood-Heinemann divisions ("Harcourt") of Reed Elsevier (London: REL; Amsterdam: REN; New York: RUK and ENL).
The combination of Houghton Mifflin's and Harcourt's elementary, secondary and supplemental businesses creates a provider that will offer customers more choices in educational publishing. The new entity will be well-positioned to make the investments required to deliver to teachers and administrators a more comprehensive and flexible set of K-12 learning solutions than is available today. The addition of Harcourt Trade to Houghton Mifflin's rich library of literature and reference titles will create a preeminent publisher with one of the industry's most distinguished lists of authors.
Houghton Mifflin will acquire the Harcourt businesses in a transaction valued at $4 billion, consisting of $3.7 billion in cash and $300 million in common stock of Houghton Mifflin Riverdeep Group PLC (Houghton Mifflin's parent company). The combined business will be led by Tony Lucki, Chairman, President and CEO of Houghton Mifflin, and former CEO of Harcourt Education and Harcourt, Inc.
Barry O'Callaghan, the principal shareholder of Houghton Mifflin, said, "When Reed Elsevier announced its intention to sell the Harcourt businesses, we were thrilled to have the opportunity to combine these businesses. The addition of the Harcourt businesses to Houghton Mifflin will strengthen our position in the highly competitive educational publishing business. Together, Houghton Mifflin and Harcourt will provide a more customized, diverse and innovative range of products to meet the changing needs of educators and students. We will be able to develop and bring new products to market more quickly than would have been possible for either of us on a standalone basis. The combination will broaden and deepen the geographic reach of our combined sales force and enable us to develop the most innovative, updated and customer-focused technology and educational programs and products to meet the evolving needs of customers, educators and students throughout the country."
Mr. Lucki said, "Customers have come to expect a wide assortment of the best educational programs available. They also demand solutions across the K-12 learning continuum with more customized and innovative content and ongoing support for the products and services they value. We decided that to be the first and best choice for them, we need to be able to provide a more comprehensive yet flexible suite of products. In Harcourt we have found the ideal partner given our similar cultures and commitment to product excellence and best practices. Together, we will be better positioned to meet the changing needs of educators and students in a wider range of subjects, states and school districts."
"In addition, we are pleased to bring together the rich literary legacies of the Houghton Mifflin and Harcourt trade groups. We would like to think that Houghton Mifflin's Henry Wadsworth Longfellow and Harcourt's T.S. Eliot would truly be proud of what we are announcing today."
Completion of the transaction, which is expected in late 2007 or early 2008, is subject to regulatory review.
Credit Suisse, Lehman Brothers and Citi have committed to provide the debt financing for the transaction. In addition, existing investors, including J & E Davy, have committed to provide $235 million of new equity financing to support the transaction. Upon completion of the transaction, Reed Elsevier will be approximately an 11.8% shareholder in the parent company of Houghton Mifflin.
Credit Suisse, Lehman Brothers and Citi are serving as financial advisors to Houghton Mifflin, and Weil, Gotshal & Manges LLP is serving as legal counsel.
About Houghton Mifflin
Boston-based Houghton Mifflin Company is one of the leading educational publishers in the United States, with more than $1.4 billion in sales. The Company publishes a comprehensive set of educational solutions, ranging from research-based textbook programs to instructional technology to standards-based assessments for elementary and secondary schools and colleges. The Company also publishes an extensive line of reference works and award-winning fiction and nonfiction for adults and young readers. In 2006, Houghton Mifflin merged with Riverdeep, bringing together one of the most respected print publishers with the leader in interactive courseware. With origins dating back to 1832, Houghton Mifflin combines its tradition of excellence with a commitment to innovation. To learn more about Houghton Mifflin, visit www.hmco.com.
About Harcourt
Harcourt Education is a leading education provider serving students and teachers in pre-K through grade 12, adult learners, and readers of all ages. The Harcourt Education companies include Harcourt School Publishers, Holt, Rinehart and Winston, Greenwood-Heinemann and Harcourt Trade Publishers. For further information, please visit harcourt.com.
Harcourt Education is part of Reed Elsevier Group plc (www.reedelsevier.com), a world-leading publisher and information provider. It is owned equally by Reed Elsevier PLC (NYSE: RUK - News) and Reed Elsevier NV (NYSE:ENL - News).
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