McGraw-Hill gets earful on breakup

Mon Aug 22, 2011 7:02pm EDT
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By David Henry

NEW YORK (Reuters) - McGraw-Hill Companies Inc directors and executives met on Monday with Jana Partners LLC, a hedge fund, and the Ontario Teacher's Pension Fund to hear their arguments that the company should be broken up.

Jana and the pension fund have a 5.6 percent stake in McGraw-Hill, which owns Standard & Poor's credit ratings business, textbook publisher McGraw-Hill Education, and assorted information businesses, the funds said in a filing on Monday.

Jana included slides from the presentation in the filing to the Securities and Exchange Commission. The filing showed the shareholders have increased their holdings by 0.4 percent since an initial filing on August 1.

McGraw-Hill is already considering spinning off or selling the education business, a person familiar with the company said last week. In June, the company put its television stations up for sale.

In response to the filing, the company said in a statement that its portfolio review "is well advanced and expected to result in significant actions in the next few months to accelerate global growth, align appropriate cost structures and build shareholder value."

The company noted that it has hired investment banking advisors Evercore and Goldman Sachs to work on its restructuring.

The shareholders said in the filing that they are concerned the company's actions "will not go far enough in addressing its issues."

McGraw-Hill shares are trading below the value of the company's four major parts, according to analysts. The stock has been suffering, too, from weakness in the education business because of tight school budgets.   Continued...