McGraw-Hill to Split Into Two Companies After Jana Challenge

[The Straight Story]

McGraw-Hill to Split Into Two Companies After Jana Challenge

McGraw-Hill Cos. will split into two companies focusing on global markets and textbook publishing, under pressure from activist investor Jana Partners LLC, and after ratings missteps by its Standard & Poor’s unit.

The transaction may be completed by the end of 2012 through a tax-free spinoff of the education unit, the New York-based company said today in a statement. McGraw-Hill Markets will include S&P and J.D. Power and Associates and be led by Chief Executive Officer Harold “Terry” McGraw III.

McGraw-Hill, whose S&P division played a central role in the 2008 global financial crisis and last month downgraded U.S. sovereign debt, began a strategic review last year of the company’s businesses. On Aug. 22, Jana Partners, a New York- based hedge fund, proposed a plan to break up the company after education revenue fell for three straight quarters.
“It’s a smart move for enhancing value,” Peter Appert, an analyst at Piper Jaffray & Co. in San Francisco, said of McGraw- Hill’s plan. “There’s more opportunity for them as two focused businesses.”

http://www.bloomberg.com/news/2011-09-12/mcgraw-hill-to-split-into-two-companies.html