Houghton Mifflin To Divest HMH Books & Media To HarperCollins For $349 Mln - Quick Facts

(RTTNews) - Learning technology company Houghton Mifflin Harcourt (HMHC) announced Monday that it has entered into a definitive agreement to divest HMH Books & Media, its consumer publishing business, to HarperCollins Publishers, a division of News Corp. (NWSA), for a cash purchase price of $349 million.

The divestiture enables Houghton Mifflin to focus singularly on K-12 education and accelerate growth momentum in digital sales, annual recurring revenue and free cash flow while paying down a significant portion of its debt.

For nearly two centuries, HMH Books & Media has published some of the world's most renowned novels, nonfiction, cookbooks and children's books. It is the largest learning technology company in the K-12 market, serving 90% of the schools, teachers and students in the U.S.

As part of the agreement, all HMH Books & Media employees will join HarperCollins, News Corp's trade publishing division. Houghton Mifflin and News Corp will work closely to provide a smooth transition for employees, customers, authors and illustrators.

The divestiture is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close in the second quarter of 2021.

HMH expects total net cash proceeds of approximately $337 million, which it plans to use all net proceeds to pay down debt, further aligning the company's capital structure with its Digital First, Connected strategy.

Houghton Mifflin also updated its full-year 2021 outlook to adjust for the sale. It now expects 2021 billings in a range of $905 million to $955 million to reflect the divestiture. HMH Books & Media contributed approximately $192 million in billings to Houghton Mifflin in 2020.