Less than a month after buying rival publishing giant
Monday said it would sell its educational unit, which includes the publisher of Winnie the Pooh books, to
for around $635 million.
The cash sale faces scrutiny by federal regulators and requires approval from McGraw's board. The companies said they expect to close the transaction in the third quarter of 2000.
, a publisher of educational materials for the grade-school set that reported 1999 pro-forma revenue of $384 million, will fetch $634.7 million, subject to certain adjustments. The unit's holdings include software maker
The Wright Group
, mathematics publisher
Everyday Learning/Creative Publications
and children's book publisher
Chicago-based Tribune, which said it will use the proceeds to pay down debt, recently completed an $8 billion cash and stock
acquisition of Times Mirror, publisher of
The Los Angeles Times
. The company said Monday's sale suits its focus on broadcasting, publishing and interactive media.
Tribune will record a one-time after-tax loss of approximately $100 million in its second-quarter financial results and will account for Tribune Education as a discontinued operation.
McGraw-Hill, owner of
magazine and a publisher of school textbooks, said the purchase will dilute 2000 earnings by 5 cents a share but will add to earnings in 2001.
The New York-based publisher said the purchase "solidifies McGraw-Hill's position as the nation's largest provider of K-12 educational materials, and provides considerable opportunities to leverage Tribune's products, brands and capabilities." McGraw-Hill said it will also expand the company's share of what it called the "edutainment" market.
McGraw-Hill shares fell 3 3/16, or 5%, to settle at 55 9/16. Tribune shares gained 5/16, or 1%, to finish at 34 13/16.