Textbook Giants Scrap Merger Under Antitrust Pressure

Cengage said the deal, announced in May 2019, was scrapped “by mutual agreement due to a prolonged regulatory review process and the inability to agree to a divestitures package with the US Department of Justice.” McGraw-Hill simply said closing conditions could not be satisfied.

The deal, which would have created a company worth about $5 billion, came at a time when college textbook prices were stable or declining slightly after two decades of rising sharply, according to US government data. McGraw-Hill is owned by Apollo Global Management.

Cengage and McGraw-Hill are behind Pearson, the world’s biggest education company, in market share.

A source familiar with the transaction said the Justice Department had demanded “significant divestitures of several dozen courses” to address antitrust concerns.

Britain’s antitrust enforcers, the Competition & Markets Authority, said in a statement that the companies had offered divestitures that were “unlikely to be sufficient in addressing its competition concerns.”

“The COVID-19 crisis has accelerated the need for students to learn wherever they are,” Cengage CEO Michael Hansen said. “On a standalone basis, Cengage is very well-positioned to continue to support the transition to digital.”

Full Content: St Louis Post-Dispatch

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