Scholastic To Sell EdTech Business To Houghton Mifflin Harcourt In $575 Mln Deal

(RTTNews) - Scholastic Corp. (SCHL) Friday announced that it has entered into a definitive agreement to sell its Educational Technology and Services or EdTech business to Houghton Mifflin Harcourt Co. (HMHC) for $575 million in cash. Scholastic expects net proceeds from the sale, after taxes, transaction fees, and other expenses, of approximately $360 to $370 million.

The transaction is expected to close in the second calendar quarter of 2015, subject to regulatory approvals and customary closing conditions. Scholastic expects the transaction to help focus on its core businesses by deepening relationships with its primary customers The company said it will continue to return capital to shareholders over time.

Scholastic said President Margery Mayer and the management team of the Educational Technology is expected to remain with the business. Its 800 employees are also expected to join Houghton Mifflin Harcourt upon transaction close.

In 2014, EdTech had reported revenue of $249 million and $40 million in operating income. For the first nine months revenues were $175 million.

Richard Robinson, Chairman, President and Chief Executive Officer, said, "We now have a historic opportunity to further grow our Children's Book Publishing and Distribution, Classroom and Supplemental Materials Publishing, and International businesses."