MAIN NEWS HEADLINES
March 19 – March 26, 2009 Edition
HMH Abandons Sale
Of Trade Division
NEW YORK, NY–Authorlink News/03/19/09-Houghton Mifflin Harcourt (HMH), owned by Ireland-based equity firm, Education Media and Publishing Group, decided last week not to sell its trade division after all. Following an auction that attracted three serious bidders, including Hachette, Perseus Book Group, and a private equity firm, Houghton Mifflin CEO Tony Lucki said the company would renegotiate its $7 billion debt load within the next few weeks and plans to grow the business internally and organizationally at a stronger clip than we would benefit from selling it.
HMH, formed by the recent merger of Houghton Mifflin and Harcourt, earns only five percent of its profits from the trade publishing business. The balance comes from instructional and testing materials. In December of 2007 Houghton Mifflin Company acquired Reed Education making the combined company the largest K-12 publisher in the world. At the same time, it brought together two remarkable trade publishing traditions which now make up the Houghton Mifflin Harcourt Trade and Reference Publishing Group.
Houghton Mifflin Company traces its history to 1832, when William Ticknor purchased The Old Corner Bookstore in Boston and, together with his partner, James Fields, established a publishing company. By the mid-nineteenth century, they were publishing some of the most renowned names in American literature, including: Henry Wadsworth Longfellow, Ralph Waldo Emerson, Nathaniel Hawthorne, Harriet Beecher Stowe, Mark Twain, and Henry David Thoreau.
Lucki explained to the media that during the selling process he felt wistful about the prospect of losing the trade and reference publisher whose roots dated back more than 150 years. He noted that he had a desk used by Nathaniel Hawthorne in his office. As we were going through this auction process, Mr. Lucki said, every time I would take a look at that desk, I would cringe.
Novelist and short story writer Nathaniel Hawthorne was a central figure in the American Renaissance. His best-known works include THE SCARLET LETTER (1850) and THE HOUSE OF THE SEVEN GABLES (1851).
After an auction that brought three serious bidders to the table, Houghton Mifflin Harcourt, the educational and trade publisher that has lately struggled financially, has decided not to sell its trade and reference division, a storied publishing house whose authors include Philip Roth, Gunter Grass and Jonathan Safran Foer.
Houghton Mifflin, which is owned by Education Media and Publishing Group, an Irish private equity concern, had engaged Credit Suisse First Boston to help it evaluate bids for the trade business, which also publishes the Curious George books and several works by J.R.R. Tolkien.
In an interview, Tony Lucki, chief executive of Houghton Mifflin, said Education Media, which currently is shouldering about $7 billion in debt, decided that it would be better off keeping the trade publisher. After all thorough evaluations and thorough due diligence, we feel that we can grow the business internally and organizationally at a stronger clip than we would benefit from selling it.
Mr. Lucki said that Houghton Mifflin Harcourt, which was formed by the merger of Houghton Mifflin with Harcourt, derives about 5 percent of its profits from the trade business, with the rest of its income coming from the instructional materials and testing units.
According to sources familiar with the discussions, bidders for the trade business included Hachette Book Group, whose Little, Brown and Grand Central Publishing units together represent some of the biggest commercial authors, including Nelson DeMille, James Patterson and Stephenie Meyer; Perseus Book Group, one of the largest independent publishing companies; and a private equity group that partnered with Wendy Strothman, a literary agent who previously ran Houghton Mifflins trade and reference division.
Mr. Lucki said Education Media was currently renegotiating its debt. We expect that to be completed within the next couple of weeks, which should reduce our $7 billion debt significantly, he said.
He added that during the auction process he felt wistful about the prospect of losing the trade and reference publisher whose roots dated back to 1832. He noted that he had a desk used by Nathaniel Hawthorne in his office. As we were going through this auction process, Mr. Lucki said, every time I would take a look at that desk, I would cringe.
Novelist and short story writer, a central figure in the American Renaissance. Nathaniel Hawthorne’s best-known works include THE SCARLET LETTER (1850) and THE HOUSE OF THE SEVEN GABLES (1851). Like Edgar Allan Poe, Hawthorne took a dark view of human nature.