Benzinga | Mar 29, 2021 08:30AM EDT

Houghton Mifflin Harcourt Shares Are Trading Higher On Selling Books & Media Segment To News Corp For $349M

Houghton Mifflin Harcourt Co (NASDAQ: HMHC) inked an agreement to divest its consumer publishing business, HMH Books & Media, to News Corp (NASDAQ: NWSA) division HarperCollins Publishers for $349 million cash.

* The divestiture will help HMH concentrate on K--12 education and drive digital sales, annual recurring revenue, free cash flow, and repay debt. HMH Books & Media generated $192 million in billings during 2020. The company will use the expected divestment proceeds of $337 million for debt repayment.

* HMHC reduced the 2021 billings expectations to a range of $905 million to $955 million from the previous range of $1.10 billion to $1.15 billion upon the divestment. The HMH Books & Media employees will join News Corp's trade publishing division HarperCollins under the arrangement.

* HMH Books & Media has published renowned novels, nonfiction, cookbooks, and children's books. It also includes innovative production company HMH Productions.

* Media and information services company News Corp recently acquired Investor's Business Daily from O'Neil Capital Management for $275 million.

* News Corp held cash and cash equivalents worth $1.6 billion as of December 31, 2020.

* Price action: HMHC shares traded higher by 23.8% at $7.40 in the premarket session on the last check Monday. NWSA share prices closed lower by 1.85% at $25.72 on Friday.