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United States textbook publishers McGraw-Hill Education and Cengage are considering merging as online competition redefines their business, according to one informed of these projects.
Both publishers tout the stock purchase deal as a merger of equals, according to the Wall Street Journal, which first reported on the talks. The WSJ announced that the merged group would be renamed McGraw-Hill, led by Cengage CEO Michael Hansen, and produce 44,000 textbooks as well as digital learning platforms.
McGraw-Hill Education and Cengage are currently owned by private equity firms. McGraw-Hill Education, which was bought by Apollo Global Management for $ 2.3 billion in 2013, canceled a $ 250-million bond sale in 2017 after failing to attract enough investors. Apollo also sought to exit its investment through an initial public offering that did not materialize.
Cengage was bought by Apax Partners for $ 7.8 billion in the corporate buyout market in 2007, but filed for Chapter 11 protection against bankruptcy six years later. After eliminating about $ 4 billion of debt, the publisher, which is also backed by private equity firms KKR and Searchlight Capital Partners, has reorganized its sales and marketing processes and is more focused on its digital activities.
If the merger ends, McGraw-Hill chief executive Nana Banerjee will leave the merged company, which could then try to become public via an IPO, the Wall Street Journal reported.
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