In a move that returns the company to its roots, Scholastic has reached an agreement to sell its educational technology group to Houghton Mifflin Harcourt for $575 million.
The group is home to such products as Read 180 and it had revenue of $249 million and operating income of $40 million in the fiscal year ended May 31, 2014. Scholastic said it will reinvest the proceeds from the sale—expected to be between $360 to $370 million--in its remain groups which publish and distribute books and other materials for the school market.
In a statement, Scholastic chairman Dick Robinson said the company has an “historic opportunity” to further grow its core businesses as it puts “renewed focus on books and reading in schools and home.” Scholastic sees opportunity for growth in all its key markets—school book fairs and book clubs, trade publishing, the classroom supplemental publishing market, and in its international businesses.
Scholastic was one of the first publishers to mount a major technology effort for the school market and while the unit has been profitable it is competing in the educational technology space with companies, such as HMH, that now have a larger presence and more resources to grow the business.
Scholastic said it expects that after the sale is completed all 800 employees of the group, which is headed by Margery Mayer, will join HMM. The sale is expected to be finalized before the end of the second quarter.
