Vivendi Universal has reached a preliminary agreement to sell Houghton Mifflin to a private equity consortium headed by Thomas H. Lee and the Blackstone Group for 1.75 billion euros ($1.72 billion). Other member of the winning consortium, which beat out equity groups led by by the Carlyle Group and Ripplewood Holdings, include Bain Capital and Apax Partners.
The price is believed to be slightly higher than Lee's original bid, but is still lower than the $2.2 billion (with $500 million in debt assumption) that Vivendi paid last year to acquire the Boston-based publisher. Vivendi valued the deal at 1.4 times HM's 2001 revenue and 9.5 times its 2001 EBITDA.
No one at Thomas H. Lee was available for comment at press time last week, but a Blackstone spokesperson told the Los Angeles Times that it had no plans to quickly divest different HM divisions. "When we make investments it is for the long term," the spokersperson said. If Lee and Blackstone do in fact hold on to HM, analysts speculate that they will look for further acquisitions to expand the publisher, particularly in the college area.
