The educational publishing landscape will change significantly in the next several months as two of the biggest players in the field are expected to get new owners. Thomson Corp. has placed Thomson Learning up for sale, and there are widespread reports that the Riverdeep Group is nearing a deal to acquire Houghton Mifflin.
Thomson plans to sell Thomson Learning, which had revenue of $2.18 billion in 2005, in three separate transactions. The company has already reached an agreement to sell its corporate education and training subsidiary, Netg, to Skillsoft for $285 million. Thomson is seeking other buyers for its assessment group, Prometric. But the largest asset sale involves its higher education and library reference group, which accounted for 79% (about $1.7 billion) of Thomson Learning's total revenue last year. The majority of that revenue was generated by the global higher education segment, which accounted for 63%, or $1.4 billion. The library reference group was responsible for 16% of revenue, approximately $350 million.
The major divisions in the education/library group include Wadsworth, South-Western, Gale, Delmar Learning and Course Technology. Thomson hopes to sell the group in its entirety in a transaction that could bring between $3.4 billion to $4 billion. The company may consider dividing the group into separate education and library operations if no buyers emerge to meet Thomson's price. Likely buyers include the three major players in the educational market: Pearson, Reed Elsevier and McGraw-Hill, as well as private equity firms. The Thomson properties would fit well with John Wiley, but the price tag may be too high.
Thomson would also be a good match with Houghton Mifflin. However, the more immediate concern at HM is its own future ownership. Although the company had no comment on reports that the educational software publisher Riverdeep is close to reaching an agreement to acquire the publisher, a deal could happen before the end of the year. HM had revenue of $1.28 billion in 2005, and Riverdeep is expected to pay more than $3 billion for the publisher. HM was acquired by three equity firms at the end of 2002 for $1.7 billion.
