In two separate interviews, Jeremy Dickens, president of Education Media & Publishing Group, parent company of Houghton Mifflin Harcourt, has acknowledged that the company would consider selling its trade and reference group. Although no prospective buyers have been mentioned, the betting in publishing circles is that the French-based Hachette Livre is the most likely candidate to take the trade operation off of HMH's hands. In an interview with PW late last year, Hachette Livre chairman Arnaud Nourry made it clear he was interesting in making a significant acquisition in the U.S., and David Young, president of HBG, said that, failing a large deal, the company would be interesting in buying a children's publisher. HMH would fit the bill on both counts. While he did not directly address the question of acquiring HMH trade last week, Young said, “Hachette always remains interested in acquisitions at the right price.”
Determining HMH trade's current value could be difficult. The company has gone through a wrenching integration process, lost its editorial director and put a freeze on buying new books. And without one full year of sales and operating data from the combined HMH to draw on, gauging HMH's true worth is a bit of a guessing game. Trade houses typically sell for between one to two times sales, or 10 to 12 times EBITDA (earnings before interest, taxes, depreciation and amortization). HMH's sales are estimated at about $200 million, but, said a source familiar with the situation, Education Media claims HMH's EBITDA is much higher than most trade houses'. While that could be a sticking point, with Hachette one of the few publishers enjoying good times, the company could make Education Media an offer they don't want to refuse.
