Education

Following the dismissal of the textbook lawsuit, Platinum Equity acquired McGraw Hill for US$4.5B

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Publisher McGraw Hill will soon move from one private equity firm to another.

Platinum Equity announced this week that it has reached an agreement to acquire the company from Apollo Global Management. The transaction value is approximately US$4.5 billion, including debt, Wall Street Journal Report.

According to a statement issued by the company, McGraw Hill CEO Simon Allen will continue to lead the business.

The acquisition happened about a year later McGraw Hill terminates efforts to merge with other publisher CengageThis transaction could have become the second largest textbook publisher in the United States, but after accepting the regulatory review process of the U.S. Department of Justice, the transaction ended in failure.

McGraw Hill was founded in 1888 and has a long history in printing. But the announcement of the acquisition indicated that the new owner of the company envisioned a digital future for the brand. McGraw Hill reports that its digital products generate more than $1 billion in revenue each year, accounting for 60% of its revenue and more than 80% of its higher education business.

Pros and cons of private equity ownership

Private equity firms have been annexing educational technology companies (And newspaper), which frustrated some observers, employees and customers, who worried about the possible adverse effects of laser focusing on cutting costs and increasing profits.

Richard said that the impact of private equity deals like McGraw Hill on textbook users and university bookstores depends on whether the company hopes to make a lot of money through fast sales or is interested in stable financial returns that are more common in the publishing industry. Hershman, Vice President of Government Relations, National University Store Association.

“The pressure from publishers to streamline has definitely affected the customer service of higher education institutions,” Hershman told EdSurge. “On the other hand, private equity companies bring in a lot of capital, and they can invest in these companies, which helps support innovation.”

In Platinum’s portfolio of about 40 companies, education and publishing are not well represented-even though it owns the yearbook and ring-like company Jostens. The company is headquartered in Beverly Hills, led by founder and CEO Tom Gores, and has reported assets of more than $25 billion.Its other recent transactions include Acquired a controlling stake in Singer sewing machine manufacturer, Acquired Urbaser Group, an environmental management company, and Game Taco, a mobile gaming platform.

Apollo Global Management, the current owner of McGraw Hill, has recently undergone a leadership change.ex CEO and chairman Leon Black stepped down this springCiting health reasons, after disclosing that he had economic ties with the financier Jeffrey Epstein, the latter died in jail while facing federal sex trafficking charges.

“Inclusive Access” lawsuit was dismissed

This deal is not the only news about McGraw Hill this week.

On Monday, a judge dismissed an antitrust lawsuit alleging that the company and several other large publishers and large bookstore chains conspired to increase the price of textbooks through subscription agreements with universities. Reuters report.

This practice, referred to by the industry as “inclusive access”, will prompt students to pay for access codes to obtain digital copies of bundled course materials. The law requires universities, retailers, and publishers to allow students to opt out of these subscriptions.But as EdSurge reported last year, The lawsuit claims that the opt-out process is “opaque, confusing, and difficult to enforce” and that publishers and retailers sometimes prevent students from opt-out.

This Merger after the student filed a claim, Independent bookstores and online textbook sellers against McGraw Hill, Barnes & Noble, Follett Higher Education Group, Cengage Learning and Pearson Education.

When dismissing the claim, US District Court Judge Denise Cote (Denise Cote) determined that there was no conspiracy to suppress competition and that independent and online stores lacked the right to sue.

Cote has experience in handling antitrust cases involving publishers; she ruled in 2013 Apple colluded with five publishers to fix e-book prices.

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