The general consensus among investment bankers and industry analysts is that by engaging in talks with the French media giant Vivendi Universal, Houghton Mifflin has put itself in play. Although neither side would comment on the discussions, sources said the two parties are in preliminary negotiations about a possible deal.
HM is coming off a disappointing 2000, when revenues rose 8%, to $1.03 billion, but because it is the largest independent educational publisher in the U.S. it should still command a purchase price of about two times sales. The company is the fourth largest educational publisher in the United States and is a leader in both the elhi market, where it had 2000 sales of $750.7 million, and the college market, where sales were $174.4 million. Revenues in the "other" segment, comprising mainly the trade division, were $102.6 million last year.
Analysts agreed that it was unlikely that a U.S. buyer would emerge to acquire all of HM, although one banker said it was possible that if HM were carved up into pieces, U.S. publishers could get involved in the acquisition process. If HM and Vivendi cannot come to terms, analysts said that Bertelsmann, with lots of cash and a desire to expand its U.S. content holdings, is the most likely candidate to make a run for the Boston-based company.
