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Activist investors call on McGraw-Hill to split company into four

Family-controlled McGraw-Hill should be split into four after underperforming its potential, according to activist investors.

Family-controlled McGraw-Hill should be split into four after underperforming its potential, according to activist investors.

Jana Partners and the Ontario Teachers’ Pension Plan, which announced earlier this month that they now hold 5.2% of McGraw-Hill’s shares, presented a plan on 22 August to separate the company into four units –information and media, Standard & Poor’s, education and the S&P index business.

It came at the same time as S&P, which downgraded its US debt rating earlier this month and rocked financial markets in the process, said Deven Sharma, its president since 2007, will step down in September. He will be replaced by Douglas Peterson, currently chief operating officer of Citibank.

Reports suggest McGraw-Hill is currently considering splitting the company in two.

In an email to CampdenFB, the company said that its discussions with all shareholders were beneficial.

"McGraw-Hill enjoys an open dialogue with its many shareholders and often gets insights from those discussions,” it said in the email.

“While not commenting on specific discussions, McGraw-Hill's portfolio review is well advanced and expected to result in significant actions in the next few months to accelerate global growth, align appropriate cost structures and build shareholder value,” the company’s statement added.

Jana Partners did not respond to questions about the presentation when contacted.

McGraw-Hill’s chairman and chief executive, Harold McGraw III, the great-grandson of founder James McGraw, owns just 4% of the business.

Despite this, the publisher is often seen as a family business, partly because a trust and a foundation established by the late Harold McGraw both continue to be large shareholders.

McGraw-Hill currently employs around 21,000 people in 40 countries and reported sales of $6.2 billion (€4.3 billion) in 2010.  

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