M&A

A Textbook Merger

Houghton Mifflin will pay $4 billion for the remaining Harcourt businesses of Reed Elsevier.
Roy HarrisJuly 17, 2007

Houghton Mifflin Co. agreed to pay $4 billion for several Harcourt businesses of Reed Elsevier PLC, creating a giant educational publisher.

The price for the Harcourt Education, Harcourt Trade and Greenwood-Heinemann divisions of Reed Elsevier includes $3.7 billion in cash and $300 million in common of Houghton Mifflin Riverdeep Group PLC. Houghton Mifflin Riverdeep was formed after Irish publisher Riverdeep Holdings Ltd. bought the Boston-based Houghton Mifflin in 2006. Sales of Houghton Mifflin currently are about $1.4 billion a year.

Debt financing for the transaction is being provided by Credit Suisse, Lehman Brothers and Citi, and exisiting investors have committed to provide $235 million of new equity financing to support the deal, Houghton Mifflin said.

Current Houghton Mifflin CEO Tony Lucki, who previously was CEO of the Harcourt Education and Harcourt Inc. units of Reed Elsevier, will lead the combined company. The deal is expected to close late this year or early next year.

In May, Pearson plc agreed to buy two other Reed Elsevier properties, Harcourt Assessment Inc. and Harcourt Education Ltd., for $950 million.