It is hard to fathom this price. Bids and intentions were due last Wednesday and I thought I would have some time to comment on the status of the sale, but clearly the size of this offer required no deliberation. (Other than confirmation that it was what it was). Just as industry followers found it hard to explain the Riverdeep/Houghton Mifflin deal this one raises many eyebrows in the industry for the multiple paid for the business.
It was approximately 1o months ago that Richard Harrington causually mentioned to the FT that they would consider selling the Learning unit. By October the divesture was confirmed and the sale process started once the final year end numbers were finalized. Any observer of the manner in which Thomson spoke and presented its business would have seen strong indications that Learning did not feature in their plans. The detail and excitment given over to Thomson Financial during the analysts calls was indication enough. Speculation suggested that a price between $5.5 and $6.0billion would be good news for Thomson. As it turns out, Thomson management has kept one step ahead of everyone with some suggesting that the recently announced merger with Reuters has been in the works for two years and their post merger plans indicate that the merger with Reuters has indeed been long in the planning. The extra billion they are getting for Learning will really help out the Reuters deal which looks increasingly cheap.
The consortium includes Apax partners and a Canadian Pension fund name the Ontario Municipal Employees Retirement Service. Apax has invested in other educational properties before but not to this extent. Thomson CEO Harrington has suggested that financially the Learning business was sound - although performance did not match that of Pearson - but they were frustrated at the slow pace of migration to on-line products. This deal could be viewed as an endorsement of the Thomson Learning management and I wouldn't expect significant changes at the higher levels. If anything, management will be given a freer reign to excellerate their online and electronic product offerings.
The transition to the close of the deal is expected to take 60 days and the company is understood to have plans in place to speed this process. The company also expects to re-name/brand itself by the end of the year.
It will be very interesting to see how this sale multiple impacts the other crop of publishing assets that are for sale.