News

HMH to acquire Scholastic’s ed-tech business

By Laura Devaney
April 24th, 2015

$575 million deal expected to increase HMH’s ed-tech, early learning reach

hmh-dealGlobal learning company Houghton Mifflin Harcourt (HMH) has entered into a definitive agreement to acquire the Educational Technology and Services (EdTech) business of Scholastic Corporation for $575 million in cash, subject to customary working capital adjustments.

The acquisition would provide HMH with a stronger position in intervention curriculum and services and extend its product offerings in key growth areas, including educational technology, early learning, and education services, creating a more comprehensive offering for students, teachers and schools.

The transaction would add digital infrastructure and expertise to support the development of next-generation products for HMH’s preK-12 and consumer businesses. In addition, HMH believes that combining EdTech’s digital intervention solutions sales expertise with HMH’s sales organization will create new opportunities and accelerate the company’s growth.

“As HMH drives a learning transformation powered by technology, we believe the EdTech segment of Scholastic will strengthen our offering in both K-12 and other key growth areas, including digital intervention, early learning, consumer and professional development,” commented Linda K. Zecher, HMH’s President and Chief Executive Officer. “We believe that by diversifying our education portfolio, we will be taking an important step toward optimizing our growth while also enhancing our resiliency throughout economic and market cycles.”

The EdTech segment of Scholastic provides digital intervention curriculum, products and services to schools and districts throughout the United States as well as related implementation and assessment services and school consulting services. The business consists of intervention solutions including READ 180® and MATH 180.

HMH expects this transaction would enable the company to more comprehensively address upcoming K-12 adoptions and the needs of students in those markets who would benefit from an intervention solution.

The management team of the EdTech business, including its President Margery Mayer, is expected to remain with the business as part of HMH. The business’ approximate 800 employees are also expected to join HMH upon transaction close.

For the fiscal year ended May 31, 2014, the EdTech segment of Scholastic delivered net sales of $249 million, up $21 million or 9 percent compared to fiscal 2013. In the same period, operating income grew $10 million or 34 percent from the prior year period to $40 million.

Material from a press release was used in this report.

About the Author:

Laura Devaney

Laura Ascione Devaney is the Managing Editor, Content Services at eSchool Media. She is a graduate of the University of Maryland's prestigious Philip Merrill College of Journalism. When she isn't wrangling her two children, Laura enjoys running, photography, home improvement, and rooting for the Terps. Find Laura on Twitter: @eSN_Laura http://twitter.com/eSN_Laura