McGraw-Hill and Cengage to merge

McGraw-Hill and Cengage to merge

Education publishers McGraw-Hill and Cengage are to combine in an all-stock merger on equal terms. The transaction has been unanimously approved by the Boards of Directors of both companies and is expected to close by early 2020, subject to regulatory approval.

A statement said the merger would "bring together two premier learning companies that will deliver significant benefits for students, educators, professionals and institutions worldwide".

The combined company is expected to be named McGraw Hill, with details to be finalized prior to closing, and will be led by Cengage c.e.o. Michael Hansen. McGraw-Hill president and c.e.o. Nana Banerjee, who is said to have played a key role in facilitating the agreement to merge and in negotiating the material terms of the transaction, will continue to lead McGraw-Hill through the transition. The combined company’s leadership team is expected to be comprised of members from both McGraw-Hill and Cengage and will be announced before the deal is closed.

Based on the financial statements of Cengage and McGraw-Hill for the 12 months ending March 31st, 2019, the combined company would have pro forma cash revenue of $3,157m and cash EBITDA less Prepub of $889m including the pro forma impact of $300m of cost synergies, the companies said.

Hansen said: “The new company will offer a broad range of best-in-class content – delivered through digital platforms at an affordable price. Together, we will usher in an era in which all students can afford the quality learning materials needed to succeed – regardless of their socioeconomic status or the institution they attend. Additionally, the combined company will have robust financial strength to invest in next-generation products, technology and services that create superior experiences and value for millions of students.”

McGraw-Hill's Banerjee said: “For more than a century, our goal has been to unlock the potential of each learner and improve lives through education. Combining our two companies and our complementary offerings will enable us to continue innovating. In this way we can continue to empower students and educators around the world with a wide choice of affordable, engaging course materials and advanced digital platforms to help them succeed throughout a lifetime of learning.”

A statement from both parties described Cengage and McGraw-Hill as two organizations with complementary missions,  and said: "Together, the new company will be even better positioned to create new, locally impactful products that use leading educational technology to improve learning experiences and outcomes."
The combined company will feature more than 44,000 titles. The companies said PreK-12th grade educators will benefit from the combination of McGraw-Hill’s full portfolio of literacy, math, science and humanities curricula, and best-in-class adaptive technologies, with Cengage Advanced Placement offerings. Both parties "maintain their commitment to high quality affordable solutions for US college students", the two said. This includes a commitment to continuing and growing their Inclusive Access and Unlimited programs, with an opportunity to combine content and broaden the programme offerings on completion of the merger.