The McGraw-Hill Cos. has abandoned its effort to sell supplementary educational materials through retail channels, reaching an agreement to sell the M-H Children's Publishing unit to School Specialty Inc. Based in Columbus, Ohio, the division produces a variety of supplemental materials including literature books, workbooks and manipulatives under such imprints as Instructional Fair, Frank Schaffer, Judy Instructo, Peter Bedrick and Spectrum. The unit has a backlist of 5,000 titles, sales of between $60 million and $65 million and 260 employees.
School Specialty will keep the Columbus office open, although some back-office functions will be integrated, said School Specialty president Dave Vander Zanden. Vince Douglas will continue to direct the MHC unit's editorial and marketing operations. The acquisition will expand School Specialty's presence in the retail channel, including sales through teacher stores, bookstores and warehouse clubs.
School Specialty, headquartered in Greenville, Wis., is a major direct marketer of supplementary products to schools and teachers for the elhi market. The company, whose brands include ClassroomDirect and Childcraft, has more than 500 salespeople.
In addition to adding more store accounts, the acquisition "will open up the parent market," enabling School Specialty to offer some of its 80,000 products to a new customer base, said Vander Zanden. School Specialty, which has sold some MHC products through direct mail, will increase that effort, Vander Zanden added.
Founded in 1959, School Specialty was acquired by U.S. Office Products in 1996 and spun off in 1998. In the fiscal year ended April 26, 2003, the company had revenue of $870 million and net income of $39.6 million. The company has made a number of niche acquisitions in the supplementary field in recent years, including the August 2002 purchase of wholesaler J.L. Hammett and the February 2003 acquisition of the Sunburst Visual Media division of Sunburst Technology. Helped by acquisitions, net income for the six months ended October 25 rose 7.5%, to $57 million, on a 3.9% increase in sales, to $639.5 million.
MHC formed the Children's Publishing group in late 2000 following its purchase of the Tribune education division. The group united a number of properties that MHC hoped would enable it to boost sales through stores. In announcing the sale, Henry Hirschberg, president of McGraw-Hill Education, said the divestiture "allows us to focus our sales efforts on the school market."