The McGraw-Hill Companies Inc.
) recently completed the earlier announced divestiture of its
education division to the
Apollo Global Management LLC
) for $2.4 billion cash.
The move is a strategic attempt on McGraw-Hill's behalf to
restructure its portfolio of businesses and concentrate more on
high growth operations, thereby enhancing shareholder value
through proper capital allocation.
Alongside, the company's education division has been
confronting shrinking revenues due to reduced spending on
textbooks by the government. Further, McGraw-Hill was facing
execution risk associated with its plans to develop its education
division into a subscription-based model through digital
McGraw-Hill will now be known as McGraw Hill Financial,
following approval from shareholders. The company will primarily
focus on capital and commodities markets and include iconic
brands like S&P Ratings, S&P Capital IQ, S&P Dow
Jones Indices and Platts.
To supplement its financial division, McGraw-Hill has made
several strategic investments in its core businesses. The
formation of S&P Dow Jones Indices coupled with S&P
Capital IQ's acquisitions of Credit Market Analysis Limited,
QuantHouse, R2 Financial Technologies and TheMarkets.com position
it well against its competitors,
Thomson Reuters Corporation
FactSet Research Systems Inc.
) and Bloomberg to grab a wider market through superior
functionality and investor oriented services and in turn help
boost the top- and bottom-line results of the company.
Moving ahead, the company expects to utilize the proceeds from
sales (approximately $1.9 billion net of tax) to buyback shares,
reduce short-term debt obligations and make strategic
Moreover, McGraw-Hill expects revenues to increase in the high
single-digit, while adjusted earnings are forecasted to be in the
range of $3.10 to $3.20 per share for 2013, up 15% year over
Currently, shares of McGraw-Hill hold a Zacks Rank #4 (Sell)
as the $5 billion civil fraud case against S&P ratings by the
U.S. Department of Justice remains a drag on the stock.
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