In a move that will alter the identity of a major U.S. education company, Houghton Mifflin Harcourt has agreed to sell its consumer books business to major general publisher HarperCollins for $349 million.
HMH, which specializes in core curriculum, supplemental, and intervention solutions, said in an announcement today that the sale will allow it to sharpen its focus on K-12, accelerate its sales growth in digital products, and pay down a significant portion of its debt.
The company has published several bestsellers, including popular J.R.R. Tolkien titles, Curious George books, and The Giver, and its books business also operates a production house that produces TV, film, and interactive media including Carmen Sandiego.
“The divestiture of the HMH Books & Media business allows us to deepen our focus on K–12 education, while also providing our talented consumer publishing colleagues and authors with infrastructure and support to fuel continued growth, champion new stories and continue this legacy,” HMH President and CEO Jack Lynch said in a statement.
In October, the company reduced its overall workforce by 22 percent—a total of 525 employees—in a move it described as part of a “ongoing assessment of our cost structure amid the COVID-19 pandemic,” according to a public filing with the Securities and Exchange Commission.
“The actions we took simplified and strengthened our business model,” Lynch said in an e-mail, “and by realigning our organization, we will be better positioned to support our customers in today’s learning environment while creating value for our shareholders.”
From 2019 to 2020, yearly net sales by HMH decreased from $1.39 billion to $1.03 billion.
Lynch noted, however, that HMH saw over 140-percent growth in software-as-a-service revenue and 300-percent growth in digital platform usage in 2020.
According to a public filing, HMH’s education segment represented about 81 percent of its sales last year, and its books and media segment composed about 19 percent.
HMH says it is the largest learning technology company in the K-12 market, serving 90 percent of U.S. schools, teachers, and students by its estimate.
The sale to HarperCollins is expected to close in the second quarter of 2021.
The divestment allows HMH to deepen its work in K-12 digital platform development and delivery, customer experience, subscription software offerings, investment in its “technology-driven team,” and other priorities, Lynch wrote.
In another announcement on Friday, HMH said it has created a new “platform team,” to bolster its digital-first strategy.
Greg Collins is leading the platform team, after leading product teams at cybersecurity and compliance company Rapid7 and financial software company Intuit. Collins will serve under the title of senior vice president, platform, and will lead product management and strategy for HMH’s platform, Ed, which saw user growth of 306 percent in 2020, according to the company.
HMH has also added Jean-Claude Brizard to its board of directors. Brizard is currently president and CEO of Digital Promise, a global nonprofit focused on accelerating education innovation, and he previously worked as the CEO of Chicago Public Schools and as a senior adviser at the Bill and Melinda Gates Foundation.