UPDATE, 11/27/12, 5:55 p.m. EST: The names of Wachtell attorneys advising on the deal have been added in the article's eighth paragraph.
New Yorkbased publisher The McGraw-Hill Companies said Monday it has agreed to sell its education business to private equity firm Apollo Global Management in a deal worth $2.5 billion.
The deal is part of McGraw-Hill's strategy to remake itself as a publisher of financial information through such brands as Standard & Poor's and J.D. Power and Associates. The company announced last year that it would shed its business dedicated to academic publishing, which makes textbooks and educational software. The company's original plan called for the unit to be sold to shareholders as part of an initiative that would create two separate public companies. But McGraw-Hill chairman Harold McGraw III said in a statement Monday that the agreement with Apollo "generates the best value and certainty for our shareholders."
McGraw-Hill's proposal for a split came on the heels of an unsuccessful effort by two activist shareholders, hedge fund Jana Partners and the Ontario Teachers' Pension Plan Board (OTPP), to split the publisher into four separate companies based on McGraw-Hill's education, information and media, financial, and S&P ratings service divisions. (As The Am Law Daily reported last year, Schulte Roth & Zabel advised Jana on that matter, while OTPP relied on in-house counsel.)
Once the deal with Apollo closes, which is expected to happen by early 2013, McGraw-Hill will be renamed McGraw Hill Financial. The company said it plans to use profits from the Apollo deal to continue an ongoing share repurchase program and to make strategic acquisitions.
Apollo has turned to Paul, Weiss, Rifkind, Wharton & Garrison and Morgan, Lewis & Bockius for legal advice on the deal. New Yorkbased corporate partners Gregory Ezring and John Scott are working on the matter for Paul Weiss, along with tax partner Brad Okun. Apollo is a longtime Paul Weiss client. The firm advised the private equity outfit on last year's $560 million purchase of media group CKX Inc.
The Morgan Lewis team advising Apollo is being led by antitrust partner Jonathan Rich. Apollo's chief legal officer is former O'Melveny & Myers partner John Suydam.
McGraw-Hill, meanwhile, is being advised by teams from Wachtell, Lipton, Rosen & Katz and Clifford Chance. Wachtell founding partner Martin Lipton announced last year that his firm was advising McGraw-Hill on its plans to split itself in two.
Wachtell's team on this deal is led by corporate partner Trevor Norwitz and corporate associate DongJu Song. Corporate of counsel Elliott Stein, antitrust partner Joseph Larson, compensation and benefits partner Adam Shapiro, restructuring and finance partner Joshua Feltman, tax partner Deborah Paul, and real estate M&A counsel Mark Koenig are also advising.
London corporate partner Kathy Honeywood is leading the Clifford Chance team advising McGraw-Hill on the sale. Earlier this year, the firm advised McGraw-Hill subsidiary S&P Capital IQ on its acquisition of market statistics company QuantHouse for an undisclosed amount.
Kenneth Vittor, McGraw-Hill's general counsel since 1995, joined the company from Cahill Gordon & Reindel in 1981.