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McGraw-Hill to sell digital learning unit to sponsor Apollo in $2.5bn deal

US financial information and education group McGraw-Hill Companies Inc (NYSE:MHP) announced today it had agreed to offload its digital learning unit to Apollo Global Management LLC (NYSE:APO) for some USD2.5bn (EUR1.9bn).

The transaction, pending regulatory clearance, is scheduled for completion in late 2012 or early next year. As part of it, McGraw-Hill will get USD250m in senior unsecured notes with an annual interest rate of 8.5%.

Following the sale of the education business, the vendor will be renamed to McGraw Hill Financial and will focus on developing its remaining brands and franchises, including Standard & Poor’s, S&P Dow Jones Indices, S&P Capital IQ, Platts and JD Power and Associates.

McGraw-Hill intends to use the sale proceeds of some USD1.9bn to sustain its share buyback programme, fund certain tuck-in acquisitions and pay off any short-term borrowing obligations. The company expects to incur a non-cash impairment charge of between USD450m and USD550m in the fourth quarter as a result of the sale.

Evercore Partners Inc (NYSE:EVR), Goldman, Sachs & Co, Wachtell, Lipton, Rosen & Katz and Clifford Chance LLP are advising the vendor, while Credit Suisse AG (NYSE:CRP), UBS Investment Bank, BMO Financial Group, Paul, Weiss, Rifkind, Wharton & Garrison LLP and Morgan, Lewis & Bockius LLP are consulting Apollo. The buyer said it had secured financing from several investment banks.


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