Houghton Mifflin Harcourt Company (NASDAQ: HMHC) confirmed that it has inked a definitive merger agreement with certain affiliates of Veritas Capital (Veritas) which is a prominent private investment firm, for the acquisition of the Houghton. The news of the acquisition of the company by Veritas has surged the company stock by 14% at the time of writing on Tuesday.
HMH's Board of Directors led a careful and thorough strategic assessment process that resulted in the merger agreement with Veritas. The Company held formal conversations with several possible strategic and financial buyers, including Veritas, as part of that examination. The Company's Schedule 14D-9 about the tender offer will contain further data about the transaction and the backdrop of the sale process.
Furthermore, HMH believes that working with Veritas would allow it to gain power and have a greater influence on the four million teachers and 50 million pupils it serves daily. It is at a key inflection point, with accelerated billings growth, solid free cash flow, and a transformed cost structure, and the time is perfect to proceed into the next stage of its long-term growth plan with a partner who has substantial industry knowledge.
The HMH Board of Directors accepted the deal. The acquisition is set to end in the Q2 of 2022, depending on authorizations and the fulfillment of standard closing conditions. HMH shareholders will be expected to get $21 in cash per share through a tender offer under the terms of the agreement. The purchase price per share reflects a 36 percent discount to the Company's unmodified share price as of January 13, 2022. It implies a $2.8 billion equity value.