It’s Official, No Spin: McGraw-Hill Sells Education Unit To Apollo

Well…that was relatively quick. Shortly after entering into exclusive talks with Apollo Global Management (APO), McGraw-Hill (MHP) announced that it has reached a deal with the private equity firm to sell off its education unit. The rumored price tag of $2.5b turned out to be correct, so kudos to those rumormongers. Additionally, as part of the transaction, McGraw-Hill will receive $250 million in senior unsecured notes issued by the purchaser at an annual interest rate of 8.5%.

After the sale (and assuming shareholder approval), McGraw-Hill will change its name to McGraw-Hill Financial in order to better show off its focus on ‘content and analytics in the global capital and commodities markets’. Change just for change sake? The Financial company expects 2012 revenue of approximately $4.4 billion with a sizable chunk of that, ~40%, coming internationally. The transaction is expected to close later this year or in early 2013 and the proceeds from the sale will be used for share repurchases, debt repayments and acquisitions.

Assuming the deal closes, this obviously spells the end for the education unit spinoff. Don’t be too sad though, there are still plenty of other opportunities in the pipeline and perhaps opportunity even remains in the ‘parent’ here.

Disclosure: Author holds no position in any stock mentioned, but does make use of several McGraw-Hill S&P products.