McGraw-Hill shareholders have met with the company to discuss breaking the business apart and selling less profitable divisions. Jana Partners LLC, founded by Barry Rosenstein, and the Ontario Teachers’ Pension Plan jointly own about 5.2% of McGraw-Hill. These two shareholder groups are pushing hard for McGraw-Hill to split its 4 divisions into different companies. Jana Partners is a hedge fund once associate with the Carl Icahn group and has already attempted to dismantle 40 companies in order to make greater profits for its shareholders.
According to McGraw-Hill spokeswoman, Patti Rockenwagner, “McGraw-Hill’s portfolio review is well advanced.” The McGraw-Hill Chairman and CEO, Harold W. McGraw III, has said that McGraw-Hill is planning to make an important announcement in the second half of 2011.
According to Goldman Sacks analysts the sum value of the parts of McGraw Hill is greater than the value of the entire company as a whole. According to analysts at Piper Jaffray, if McGraw-Hill spun off some businesses, its share price would be trading closer to $53 rather the low $40’s.
One of the advantages of economic recessions is that it forces businessmen and investors to review the health of their companies and to push for improvements where possible. I think that we are seeing this business review and improvement process now. Its all for the best!