One of the more interesting moves in today’s otherwise bloody market is that of Houghton Mifflin Harcourt (NASDAQ:HMHC). Currently, HMHC stock has surged more than 15% higher on extremely heavy volume. Additionally, this stock remains little-moved from its opening price, indicative of a massive buyout deal.
Today, it was announced that Veritas Capital has agreed to purchase Houghton Mifflin for $2.8 billion in cash. This deal is one that many saw coming, as Houghton Mifflin reportedly put itself up for sale in January.
As an education company focused on selling textbooks, HMHC is one of many businesses that have grown in investor interest of late. As more students switched to online learning options, Houghton Mifflin has pivoted nicely to meet consumer demand. This company now offers online programs “including science, math and languages to more than 50 million students in 150 countries.”
For Veritas, these market-leading digital solutions are important for the company’s portfolio. Looking forward to generate growth, this partnership is one the market seems to think makes sense. Let’s dive into some details of this deal for those interested.
What to Know About the Veritas Acquisition of HMHC Stock
Veritas’ $2.8 billion acquisition of Houghton Mifflin is the latest in a string of deals in the education space. Veritas has been aggressively consolidating this space in recent years, acquiring other companies such as Cambium Learning in 2018.
Reportedly, this all-cash deal will come in at $21 per share. With HMHC stock currently trading just a hair below the $21 level, it appears most investors believe this deal has a high likelihood of being approved. It’s worth noting that this deal has been approved by Houghton Mifflin’s board of directors. Additionally, the deal is expected to close next quarter.
Much of this view appears to come from the apparent synergies that may be created via the combination of these two companies. As Veritas looks to build its online offerings, Houghton Mifflin’s offering becomes much more attractive. Notably, this deal has been carried out at an impressive premium to Houghton Mifflin’s 52-week low of less than $6 per share. Accordingly, long-term investors who have stuck with HMHC stock have been well-rewarded.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
