Why Veritas Capital Is Buying Houghton Mifflin Harcourt (HMHC) For $2.8 Billion

By Amit Chowdhry ● Feb 22, 2022
  • Houghton Mifflin Harcourt Company (Nasdaq: HMHC) announced it is being acquired by Veritas Capital. This is why.

Houghton Mifflin Harcourt Company (Nasdaq: HMHC) a learning technology company, announced today that it has entered into a definitive merger agreement with certain affiliates of Veritas Capital, a leading private investment firm, for the acquisition of the company. Pursuant to the terms of the agreement, HMH shareholders are going to be entitled to receive $21 in cash per share through a tender offer.

The per-share purchase price represents a 36% premium to the company’s unaffected share price as of January 13, 2022, and implies an equity value of approximately $2.8 billion. And the decision to enter into an agreement with Veritas was the result of a deliberate and thorough strategic review process overseen by HMH’s Board of Directors.

As part of that review, the company held discussions with several potential strategic and financial bidders, including Veritas, through a formal process.

This agreement was unanimously approved by HMH’s Board of Directors. And the transaction is expected to be completed in the second quarter of 2022, subject to receipt of requisite regulatory approvals and satisfaction of customary closing conditions.

KEY QUOTES:

“Partnering with Veritas will provide HMH with the opportunity to accelerate our momentum and increase our impact on the four million teachers and 50 million students that we support each day. With accelerating billings growth, strong free cash flow and a transformed cost structure, we are at an important inflection point, and the time is right to move into the next phase of our long-term growth strategy alongside a partner that brings significant industry expertise. As the promise of digital learning increasingly takes hold across the nation, we are confident this transaction will deepen our ability to bring the power of learning to even more teachers and their students, invest in our purpose-driven team, and have a positive impact on the communities we serve.”

— Jack Lynch, President and Chief Executive Officer of HMH, who will continue to lead the company along with the current management team

“We recognize HMH as one of the storied brands in education and are excited to partner with the company to expand its market-leading digital solutions and deliver the most efficacious products to students and teachers. Over Veritas’ two decades of investing, education and technology have both become critical areas of focus across our portfolio. We look forward to bringing to bear our deep experience in K-12 education and proven track record to meaningfully invest in the Company to help drive better outcomes for students across the nation.”

— Ramzi Musallam, Chief Executive Officer and Managing Partner of Veritas