Houghton Mifflin Harcourt Completes Sale to Veritas Capital

Mergers & Acquisitions

• By Kristal Kuykendall
• 04/07/22

K–12 curriculum publisher Houghton Mifflin Harcourt today announced that the sale of the company to Veritas Capital has been completed after approximately 57% of HMH shares were tendered at $21 per share, putting the transaction value at $2.8 billion.

HMH provides core curriculum, supplemental and intervention solutions, and professional learning services to more than 50 million students and 4 million educators in 150 countries. The sale to tech-focused private equity firm Veritas is expected to boost HMH’s digital transformation and accelerate its long-term growth plans, HMH executives said in a news release.

HMH’s stock on NASDAQ will cease trading effective today, the company said; HMH moves forward as a wholly owned subsidiary of Veritas.

The decision to sell to Veritas — initially announced on Feb. 23 — followed a strategic review by HMH's Board of Directors that included discussions with several potential bidders, according to the announcement.

“Partnering with Veritas will provide HMH with the opportunity to accelerate our momentum and increase our impact. … The time is right to move into the next phase of our long-term growth strategy alongside a partner that brings significant industry expertise,” said HMH President and CEO Jack Lynch, who will continue to lead the company along with the current management team, the company said. “As the promise of digital learning increasingly takes hold across the nation, we are confident this transaction will deepen our ability to bring the power of learning to even more teachers and their students, invest in our purpose-driven team, and have a positive impact on the communities we serve.”

Based in Boston, HMH is one of the three largest providers of K–12 education and professional development content, according to Moody’s Investors Service.

The day after the agreement to sell was announced, shareholder Breach Inlet Capital objected to the terms of the deal in a letter to the HMH board that also was posted online. The letter, signed by Breach Inlet Capital Founder and Portfolio Manager Chris Colvin, pins its objections on comparable valuations of HMH competitors as well as recent earnings and outlook statements by HMH executives, concluding with: “We think selling HMH for $21/share is an egregious decision and we will NOT be tendering our shares into the offer.”

An HMH spokeswoman declined to comment at the time except to note that Breach Inlet Capital’s percentage of shares apparently was not large enough to meet the 5% reporting threshold, since no such filing with the Securities and Exchange Commission had been made.

The tendering of 57% of outstanding shares was enough to meet the threshold of the sale terms, HMH said. The sale comes about a year after HMH sold its consumer book publishing division to HarperCollins Publishers parent News Corp. for $349 million.