Cengage and McGraw-Hill Education’s goal of creating one giant educational publisher has been abandoned after the Department of Justice informed the companies it had serious concerns that the proposed transaction, as structured, would harm competition.
The merger would have combined the second and third largest publishers of textbooks in the United States in a market long dominated by three major textbook publishers.
The planned “merger of equals,” announced in May 2019, was supposed to be completed by March this year. But the process did not go as planned.
“American students were our primary concern when evaluating the possible competitive effects of this deal,” said Assistant Attorney General Makan Delrahim of the department’s Antitrust Division. “The decision to abandon this merger preserves competition in the market for textbook publishing, an important industry in the education sector. Cengage and McGraw-Hill’s decision to abandon this merger also preserves innovation, as the two firms compete aggressively in the development of courseware technology.”
McGraw-Hill, headquartered in New York City, is the second-largest publisher of course materials in higher-education, which include physical textbooks, e-books, and digital courseware. McGraw-Hill is a private company, owned by a private equity fund operated by Apollo Global Management LLC.
Cengage is a publicly-traded company that is headquartered in Boston, Massachusetts. It is the third-largest publisher for higher-education course materials, which includes physical textbooks, e-books, and courseware.