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McGraw-Hill sets plan to split into 2 companies

McGraw-Hill sets plan to split into 2 companies

September 12th, 2011 in News

NEW YORK (AP) - McGraw-Hill Cos. will split up into two public companies with one focused on education and the other centered on markets, featuring the Standard & Poor's unit.

The decision, which has been expected, follows a yearlong review of the company's business. Investors have pushed the New York company to boost the company's stock price, which has dropped by more than 40 percent since 2006.

The company's S&P ratings agency has been under fire for its recent downgrade of U.S. deb.

McGraw-Hill said Monday it will also accelerate share buybacks to a total of $1 billion for 2011. It has bought back about half that amount to date.

McGraw-Hill Education will be the new company focused on education services and digital learning, while McGraw-Hill Markets will retain S&P and J.D. Power and Associates, a market research company.

It also includes S&P Capital IQ, a provider of data, research, benchmarks and analytics and Platts, a provider of information and indices in energy, petrochemicals and metals.

The markets business expects 2011 revenue of about $4 billion, with close to 40 percent of it from international markets. The education segment is forecasting revenue of about $2.4 billion for the year.

The company said the split will create more "sharply defined," focused companies that will make it easier for investors to assess their value.

Terry McGraw, chairman, president and CEO of the company, will lead the Markets business. A search has begun for a leader of the education business, the company said. Its board has approved the split.

Shares of McGraw-Hill climbed 88 cents, or 2.3 percent, to $39.60 in premarket trading.