After a year-long review by the Justice Department, educational publishing giants McGraw-Hill and Cengage have called off their merger.
In separate statements, M-H and Cengage both cited the inability to agree with the government on what assets the companies needed to divest to allow the merger to move forward as the reason for terminating the deal. The companies had hoped to find $300 million in annual cost savings once the deal was done.
“Because the required divestitures would have made the merger uneconomical, McGraw-Hill and Cengage have decided to terminate the merger agreement,” M-H said. Cengage noted that the deal had been called off “due to a prolonged regulatory review process and the inability to agree to a divestitures package with the U.S. Department of Justice.” Both companies said neither company will face a break-up fee.
The proposed merger was announced last May 1, and would have created an educational publishing and technology company that publishes materials for the K-12, higher education, English Language Teaching, professional, medical, and library reference markets. Annual sales from the combined companies would have topped $3 billion. The deal had been expected to be completed in early 2020, but had been delayed twice.
In its announcement, Cengage stressed its investments in digital content make it well-suited to meet the growing interest in digital learning, which has been accelerated by the coronavirus pandemic. “On a standalone basis, Cengage is very well-positioned to continue to support the transition to digital and help students save significant money,” the company said.
In a statement M-H CEO Simon Allen noted that as a standalone company, M-H will continue to help educators “make the transition to online learning.”
