Houghton Mifflin Co. - 07/16/07
Houghton Mifflin Company to Acquire Harcourt Education and Harcourt Trade
Divisions from Reed Elsevier
Combined Business Will Be a Preeminent Educational Publisher
Well-Positioned to Meet the Evolving Needs of Educators and Students in the
Dynamic and Highly Competitive Educational Publishing Business
BOSTON — July 16, 2007 — Houghton Mifflin Company today announced that
it has signed a definitive agreement to acquire the Harcourt Education,
Harcourt Trade and Greenwood-Heinemann divisions ("Harcourt") of Reed Elsevier
(London: REL; Amsterdam: REN; New York: RUK and ENL).
The combination of Houghton Mifflin's and Harcourt's elementary, secondary and
supplemental businesses creates a provider that will offer customers more
choices in educational publishing. The new entity will be well-positioned to
make the investments required to deliver to teachers and administrators a more
comprehensive and flexible set of K–12 learning solutions than is available
today. The addition of Harcourt Trade to Houghton Mifflin's rich library of
literature and reference titles will create a preeminent publisher with one of
the industry’s most distinguished lists of authors.
Houghton Mifflin will acquire the Harcourt businesses in a transaction valued
at $4 billion, consisting of $3.7 billion in cash and $300 million in common
stock of Houghton Mifflin Riverdeep Group PLC (Houghton Mifflin's parent
company). The combined business will be led by Tony Lucki, Chairman, President
and CEO of Houghton Mifflin, and former CEO of Harcourt Education and
Barry O'Callaghan, the principal shareholder of Houghton Mifflin, said, "When
Reed Elsevier announced its intention to sell the Harcourt businesses, we were
thrilled to have the opportunity to combine these businesses. The addition of
the Harcourt businesses to Houghton Mifflin will strengthen our position in
the highly competitive educational publishing business. Together, Houghton
Mifflin and Harcourt will provide a more customized, diverse and innovative
range of products to meet the changing needs of educators and students. We
will be able to develop and bring new products to market more quickly than
would have been possible for either of us on a standalone basis. The
combination will broaden and deepen the geographic reach of our combined sales
force and enable us to develop the most innovative, updated and
customer-focused technology and educational programs and products to meet the
evolving needs of customers, educators and students throughout the country."
Mr. Lucki said, "Customers have come to expect a wide assortment of the best
educational programs available. They also demand solutions across the K–12
learning continuum with more customized and innovative content and ongoing
support for the products and services they value. We decided that to be the
first and best choice for them, we need to be able to provide a more
comprehensive yet flexible suite of products. In Harcourt we have found the
ideal partner given our similar cultures and commitment to product excellence
and best practices. Together, we will be better positioned to meet the
changing needs of educators and students in a wider range of subjects, states
and school districts."
"In addition, we are pleased to bring together the rich literary legacies of
the Houghton Mifflin and Harcourt trade groups. We would like to think that
Houghton Mifflin's Henry Wadsworth Longfellow and Harcourt's T.S. Eliot would
truly be proud of what we are announcing today."
Completion of the transaction, which is expected in late 2007 or early 2008,
is subject to regulatory review.
Credit Suisse, Lehman Brothers and Citi have committed to provide the debt
financing for the transaction. In addition, existing investors, including J &
E Davy, have committed to provide $235 million of new equity financing to
support the transaction. Upon completion of the transaction, Reed Elsevier
will be approximately an 11.8% shareholder in the parent company of Houghton
Credit Suisse, Lehman Brothers and Citi are serving as financial advisors to
Houghton Mifflin, and Weil, Gotshal & Manges LLP is serving as legal counsel.
About Houghton Mifflin
Boston-based Houghton Mifflin Company is
one of the leading educational publishers in the United States, with more than
$1.4 billion in sales. The Company publishes a comprehensive set of
educational solutions, ranging from research-based textbook programs to
instructional technology to standards-based assessments for elementary and
secondary schools and colleges. The Company also publishes an extensive line
of reference works and award-winning fiction and nonfiction for adults and
young readers. In 2006, Houghton Mifflin merged with Riverdeep, bringing
together one of the most respected print publishers with the leader in
interactive courseware. With origins dating back to 1832, Houghton Mifflin
combines its tradition of excellence with a commitment to innovation. To learn
more about Houghton Mifflin, visit www.hmco.com.
Harcourt Education is a leading education
provider serving students and teachers in pre-K through grade 12, adult
learners, and readers of all ages. The Harcourt Education companies include
Harcourt School Publishers, Holt, Rinehart and Winston, Greenwood-Heinemann
and Harcourt Trade Publishers. For further information, please visit www.harcourt.com.
Harcourt Education is part of Reed Elsevier Group plc (www.reedelsevier.com),
a world-leading publisher and information provider. It is owned equally by
Reed Elsevier PLC (NYSE: RUK) and Reed Elsevier NV (NYSE:ENL).
Kekst and Company (New York, USA)