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Apax and OMERS to pay $750m for Houghton Mifflin division

The educational publishing house has agreed to sell its college-related arm to the consortium, which will add it on to Cengage, the former Thomson Learning division it acquired in July for $8 billion.

Apax Partners and OMERS Capital Partners, the private equity arm of Canadian pension Ontario Municipal Employees Retirement System, are expanding their higher education publishing holdings with an agreement to buy the Houghton Mifflin College Division (HM College) for $750 million (€509 million).

The publishing house said it is spinning off the division to better focus on its core business aimed at students enrolled in grades Kindergarten through high school.

HM College will be added on to Cengage, the former higher education, careers and library reference division of Thomson Learning that the buyout consortium acquired for $8 billion in July.

“We are very pleased to acquire the well-respected assets of HM College, which are highly complementary to our existing business,” Ronald Dunn, Cengage’s president and chief executive, said in a statement.

Post-buyout, Cengage and Houghton Mifflin have agreed to “cooperate to expand the distribution of Cengage's college textbooks and related materials into the US. high school market, with particular emphasis on ‘Advanced Placement’ and honours programs”, the firms said.

The deal, subject to regulatory approvals, is expected to complete in the first half of 2008. Debt financing will be in the form of additional term loans under Cengage Learning's existing credit agreement, underwritten by The Royal Bank of Scotland, according to a statement. Additional equity investments will also be made by Apax and OMERS to finance the deal, the firms said, though they did not disclose specific details.

Global buyout firm Apax is reportedly also in the running to buy the UK publisher Emap.