McGraw Hill to Sell Education Business to Apollo (MHP, APO)

McGraw Hill to Sell Education Business to Apollo (MHP, APO)


Global information services provider, The McGraw-Hill Companies, Inc.(MHP) reported on Monday that they will be selling their education business to Apollo Global Management LLC(APO).

MHP reported that an agreement has be approved for it to sell its McGraw-Hill Education business to Apollo Global Management. APO will pay $2.5 billion for the business, with an additional $250 in senior unsecured notes issued by APO, holding an annual interest rate of 8.5%. This acquisition is planned to occur in late 2012 or early 2013.

McGraw Hill will remain McGraw Hill Financial, and is expecting 2012 revenue of $4.4 billion, which 40% of all revenue from international markets.

MCH’s CEO, Harold McGraw III commented, “after carefully considering all of the options for creating shareholder value, the McGraw-Hill Board of Directors concluded that this agreement generates the best value and certainty for our shareholders and will most favorably position the world-class assets of McGraw-Hill Education for long-term success.”

The company plans to use $1.9 billion of its profit from this transaction for its share repurchase program, to make future acquisitions, and to pay off short term borrowing debt.

McGraw-Hill shares were up $1.06, or 2.06% during Monday morning trading. The stock is up 18.19% YTD.

The Bottom Line
Shares of McGraw-Hill (MHP) have a 1.96% dividend yield, based on Friday’s closing stock price of $51.94. The stock has technical support in the $48 price area. If the shares can firm up, we see overhead resistance around the $56 price level.

The McGraw-Hill Companies, Inc.(MHP) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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