Major publishing firms call off merger after CMA intervention

Two major publishing firms have agreed to cancel a proposed merger after the Competition and Markets Authority (CMA) raised concerns over the deal.

Higher education textbook publishers McGraw-Hill and Cengage announced the plans in May 2019, with the merger set to complete at the start of 2020, but the deal was delayed due to regulator intervention.

Publishing the findings of an initial Phase 1 investigation in March 2020, the CMA concluded that the proposed deal raised competition concerns that “could mean students pay more for their textbooks”.

In response, both organisations, which publish textbooks and associated materials for higher education students, offered proposals to address these concerns.

But the regulator said they were “unlikely to be sufficient in addressing its competition concerns” and so the merger was referred for an “in-depth, Phase 2, investigation”.

As a result, the firms have now formally announced that they have “mutually agreed to terminate their proposed merger of equals”.

Commenting on the deal, Simon Allen, CEO of McGraw-Hill, said: “Because the required divestitures would have made the merger uneconomical, McGraw-Hill and Cengage have decided to terminate the merger agreement.

“This will allow each of us to focus on our respective stand-alone strategies for the benefit of our owners, employees, customers and other stakeholders.”

Cengage, meanwhile, said the decision was caused by “a prolonged regulatory review process” and the inability to sell off subsidiary business interests or investments.

If you need legal advice in connection with plans to merge your business or to acquire a new one, please get in touch with our team today: andrewfirman@cartercamerons.com.