News Corp. to Buy Houghton Mifflin Unit for $349 Million

(Bloomberg) -- Rupert Murdoch’s News Corp. agreed to buy the consumer arm of educational publisher Houghton Mifflin Harcourt Co. for $349 million, the media company’s second publishing acquisition in less than a week.

The all-cash purchase of the Houghton Mifflin unit gives News Corp. access to high-profile novels from authors including George Orwell and J.R.R. Tolkien. The New York media giant said March 25 that it had agreed to buy Investor’s Business Daily for $275 million.

News Corp. touted the addition of Houghton Mifflin’s extensive backlist of titles to the company’s HarperCollins publishing unit in a statement Monday. “Backlists have proven to be a sustainable and growing source of revenues, high margins and cash flow for publishers, particularly evergreen properties with broad, enduring and global appeal,” News Corp. said.

Houghton Mifflin Harcourt Books & Media, as the consumer division is known, had net sales of $191.7 million and adjusted earnings before interest, taxes, depreciation and amortization of $26.6 million in 2020, News Corp. said.

For its part, Houghton Mifflin said the unit sale would allow the remaining company to “focus singularly on K-12 education and accelerate growth momentum in digital sales, annual recurring revenue and free cash flow while paying down a significant portion of its debt.”

Houghton Mifflin’s shares soared as much as 22% to $7.28 in New York trading Monday. They had risen about 80% this year through March 26, giving the Boston-based company a stock-market value of about $762 million.

Dow Jones reported Sunday that the deal was imminent.

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