News Corp to Acquire Houghton Mifflin Harcourt’s Consumer Division for $349 million in Cash

News Corp clinched a deal to acquire Houghton Mifflin Harcourt’s books and media segment for $349 million in cash, planning to combine the publisher with its HarperCollins Publishers subsidiary.

The Rupert Murdoch-controlled company said it expects the deal to close in the second quarter of calendar 2021, subject to to customary closing conditions, including regulatory approvals.

The deal will add more horsepower to the business of HarperCollins, the second-largest consumer book publisher in the world after Bertelsmann’s Penguin Random House — and comes after Bertelsmann inked a pact with ViacomCBS to acquire Simon & Schuster for $2.17 billion.

The HMH Books & Media backlist of more than 7,000 titles include “The Lord of the Rings” trilogy and other titles by J.R.R. Tolkien; “1984” and “Animal Farm” by George Orwell; and “All the King’s Men” by Robert Penn Warren. HarperCollins currently has rights to Tolkien’s works in the British Commonwealth.

The announcement comes just four days after News Corp said it will buy Investor’s Business Daily, the stock-analysis and investment research publication, for $275 million.

“There is a resurgence in reading and listening to books, and we believe the brilliant HMH Books & Media backlist and first-rate frontlist have an enduring and increasing value,” News Corp CEO Robert Thomson said in a statement. “The HarperCollins collection will be bolstered for children and young adults, and authors around the world will have a larger platform for their creativity and ingenuity. It is crucial to expand in an era in which emerging monopolies threaten the creative marketplace, so we welcome J.R.R. Tolkien, Virginia Woolf, George Orwell and many, many other distinguished writers to HarperCollins.”

In calendar year 2020, HMH Books & Media reported net sales of $191.7 million — over 60% of which were were generated by its backlist — and adjusted earnings of $26.6 million. For the quarter ended Dec. 31, 2020, HarperCollins revenue grew 23% from the year-earlier period, to $102 million, with adjusted earnings up 65% to $41 million.

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