Riverdeep buys Harcourt Education

DUBLIN, Ireland, July 16, 2007 -- Educational and trade publisher Harcourt is changing hands, Dublin-based HM Riverdeep Group announced an agreement to acquire the U.S. business operations of Harcourt Education from Anglo-Dutch publisher Reed Elsevier. With the $4 billion deal Riverdeep will become a major U.S. educational publisher. Last year Riverdeep acquired Houghton Mifflin. The Riverdeep consolidations further reduces the number of U.S. educational publishers, putting the company in the ranks of Pearson and less than a handful of industry giants. MORE Riverdeep said the combination of Houghton and Harcourt under one roof will give elementary and secondary school customers as well as supplemental customers a broader choice of products. The company was silent on possible product consolidations, which usually acquire such acquisitions. MORE Riverdeep had moved aggressively with its offer, which was made just as the auction was about to begin The offer, in effect, blocked competitors from acquiring the company. MORE In charge of the new Harcourt-Mifflin it will be Tony Lucki. He not only is Houghton's chief executive but former chief executive at Harcourt. MORE The price for Harcourt includes $3.7 billion in cash plus $300 million in Riverdeep stock. The stock gives Reed an 11.7 percent interest in Riverdeep's earlier-acquired Houghton unit. The deal, expected to close in early 2008, includes Harcourt's elementary school publishing businesses. Involved are Harcourt School Publisher, in the pre-K and K-6 field; Holt, Rinehart & Winston, in 6-12; Harcourt Achieve, a supplementary publisher; and Greenwood-Heinemann, a library reference publisher. Also in the deal is Harcourt Trade. Total revenue of the properties involved in the sale was $1.11 billion in 2006, mostly from the school and library operations. Sales of Harcourt Trade are estimated at $60 million. The combination of Harcourt with Houghton will create a trade unit with revenue of approximately $200 million, notably strong in children's publishing and literary fiction. MORE Reed had put Harcourt up for sale in February after under-performance. Harcourt's revenue was flat in 2006, due mostly to the loss of assessment contracts. Operating profits took a 20 percent dip. The first unit to go, this spring, was Harcourt's testing and international groups to Pearson for $950 million. The Riverdeep deal ends Reed's presence in education publishing.

TONY LUCKI Top job at amalgamated company