Vivendi's topsy-turvy sale of Houghton Mifflin to a consortium of American investment firms was finally completed December 30. The investment group, which is led by Thomas H. Lee Partners and Bain Capital and includes funds from the Blackstone Group, paid $1.66 billion for the publisher—$1.28 billion in cash and $380 million in debt assumption.
In separate statements, representatives from both Bain and Thomas H. Lee sought to put to rest rumors that they are considering breaking up HM or looking to flip the property. Mark Nunnelly, managing director at Bain, said the firm is looking forward to "grow[ing] the company in its entirety." Thomas H. Lee's managing director, Scott Sperling, called HM "an outstanding company," adding, "we intend to keep it in Boston and grow it."
Hans Gieskes, who was named president and CEO of HM this summer, said he was "very happy" the sales process is over and that the company ended up "in the hands of buyers we really like." Gieskes told PW the new owners "have very ambitious investment plans" that include investing in organic growth and in strategic acquisitions. He said there are no plans to sell HM's trade and reference division. "This is a nonissue and a question that I would like to put to bed," Gieskes emphasized. He said HM would like to make the trade and college divisions "stronger and larger." HM's trade division does about $100 million in sales annually, while the college unit sales are about $200 million. Its largest group is the elhi division, where sales are approximately $800 million.
Gieskes said HM's elhi segment "had a pretty good year" in a soft market. Sales were up in the college division, and the trade division had an "excellent year. We love [ J.R.R.] Tolkien," Gieskes said. HM is Tolkien's hardcover publisher. Gieskes said that while HM corporate staff was absorbed by the sales process, the company's division managers remained "completely focused on the business. We didn't lose one author or drop the ball in any areas." With the deep pockets and stability its new ownership brings, HM "is set up very well for 2003."
Vivendi, which acquired the publisher in summer 2001 for $1.7 billion in cash and $500 million in debt, put HM, along with its European publishing assets, on the block in late summer in an effort to reduce its massive debt. After it failed to receive adequate offers for the entire publishing group, Vivendi sold its European publishing divisions to Lagardere (News, Oct. 28, 2002) and looked for a separate buyer for HM. Lee and Bain reached an agreement to buy HM in November.
