Houghton Mifflin To Be Bought by HM Rivergroup
11.29.2006—Textbook publisher Houghton Mifflin will be bought out by newly formed Irish firm HM Rivergroup PLC. Concurrent with the Houghton acquisition, HMR will also purchase Riverdeep Holdings Ltd., an educational software publisher. The combined deal is worth approximately $5 billion.
Aside from the financial terms of the deal, few details are known at this point in terms of how Houghton and Riverdeep assets will be integrated. HM Rivergroup does say that it will now have the ability to capitalize on the "convergence of print and digital education platforms."
"The combined business will leverage Houghton Mifflin's brand names, established relationships and large sales force to provide customers with an unrivaled product offering," said Barry O’Callaghan, executive chairman of HM Rivergroup.
"Riverdeep represents an excellent strategic fit with Houghton Mifflin, bringing its high quality electronic courseware offerings to our core basal textbook and supplemental products business. This combination will differentiate us from our competitors and will enable us to participate as one of the leading players in the fastest growing segment of the U.S. school education market," said Tony Lucki, chairman, president and CEO of Houghton Mifflin, in a prepared statement. "I am pleased to be joining forces with Barry, whose passion and vision for this new enterprise are inspiring."
Houghton Mifflin is currently owned by affiliates of private investment firms Thomas H. Lee Partners, Bain Capital Partners and The Blackstone Group, as well as management. HMR will purchase Houghton for approximately $3.4 billion, including $1.75 billion in cash and the assumption of $1.61 billion in net debt. Riverdeep will be acquired in a share for share exchange valued at approximately $1.2 billion. (Riverdeep publishes such titles as Destination Math, Destination Reading, The Print Shop, Reader Rabbit and Kid Pix. For the 12 months ended Sept. 30, Houghton and Riverdeep had combined revenues of $1.425 billion.
HM Rivergroup said it expects to complete the acquisitions by the end of 2006, subject to regulatory approvals and other conditions. When the transaction is complete, HM Rivergroup will change its name to Houghton Mifflin Riverdeep Group PLC.
We will provide more information about this acquisition when it becomes available.
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