Textbook deal looks to e-publishing
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Textbook deal looks to e-publishing
BOB MOON: You might recognize some of thes authors: Henry David Thoreau and Ralph Waldo Emerson. Or these titles: “The American Heritage Dictionary” and “Curious George.” These days, most of Houghton Mifflin’s business actually comes from textbooks, and now the publisher will include software, too.
As Alisa Roth tells us, an Irish educational software company is buying the venerable publisher for more than $3 billion.
ALISA ROTH: Houghton Mifflin is one of the country’s biggest textbook publishers. Privately held Riverdeep has bought lots of smaller software companies here and abroad. Riverdeep will pay $3.4 billion — that’s nearly three times what Houghton’s current owners paid four years ago.
Educational publishing analyst Kathy Mickey thinks it’s a pretty good partnership.
KATHY MICKEY: The underlying expectation throughout the industry is that technology obviously is the wave of the future. And in this particular case for Houghton Mifflin, they get that.
And, she says, Riverdeep gets a ready-made market through its new partner. She says it’s a deal many have been expecting for years — except most guessed it would be a publisher buying a software company, not vice versa.
It’s also a deal that some say is risky.
Investment banker Michael Bijouai says it’s hard to know when technology will be the star of educational publishing.
MICHAEL BIJOUAI: The question is when is this gonna tilt and how is it gonna tilt? When you have a problem of forecasting where the market is gonna go, you make small bets. Riverdeep is betting the farm.
The two will form a new company, HM Riverdeep, which will be based in Ireland. That’ll give them some competitive advantage, not least the country’s very favorable corporate tax policy.
In New York, I’m Alisa Roth for Marketplace.
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