|Weekly News Digest
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'At Houghton Mifflin Harcourt, the Consolidation Carousel Continues' by Jim Milliot
Jim Milliot writes the following for Publishers Weekly:
While the industry waits to see who the new owner of Simon & Schuster will be, another large trade publisher has been put up for sale: Houghton Mifflin Harcourt [HMH] said it is exploring the sale of its trade division. Though not one of the Big Five trade publishers, HMH Books & Media is in the next tier, with sales in 2019 of $180 million. …
The struggles that HMH’s education group has encountered in transitioning from being a print-based publisher to a digital-focused publisher drove the company’s leadership to look for a buyer for the trade group. …
HMH explained the planned divestiture of the trade group by noting that the sale is part of its effort to make HMH ‘a pure-play technology learning company.’ To achieve that goal, it implemented a restructuring in early October to cut costs and focus its energies on digital products. The action eliminated 525 jobs in the educational group, though the trade division was not affected.
In a conference call with analysts about HMH’s third quarter results, executives made it clear they see the future of the company in the digital world and will use the proceeds from the divestiture of the trade group to pay down debt and help fund the digital transition. …
Possible buyers for the trade division include the same players who have been reported to be interested in S&S: Penguin Random House, HarperCollins, and Hachette Book Group parent Lagardère. At a considerably lower price than S&S (whose 2019 sales were $814 million), HMH could also attract additional buyers, including Amazon, which was reported to have looked into buying S&S, and private equity firms. It is possible that interested buyers will wait for the S&S deal to close and use its price to help assess the value of HMH Books & Media.
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