UPDATE: McGraw-Hill to Sell Education Unit to Apollo for $2.5B

The McGraw-Hill Companies MHP today announced it has signed a definitive agreement to sell its McGraw-Hill Education business to investment funds affiliated with Apollo Global Management, LLC APO (collectively with its subsidiaries, "Apollo"), for a purchase price of $2.5 billion, subject to certain closing adjustments.  As part of this transaction, McGraw-Hill will receive $250 million in senior unsecured notes issued by the purchaser at an annual interest rate of 8.5%.  The transaction, which is expected to close in late 2012 or early 2013, is subject to regulatory approval and customary closing conditions. Upon closing, McGraw-Hill, which will be renamed McGraw Hill Financial (subject to shareholder approval), will be a high-growth, high-margin benchmarks, content and analytics company in the global capital and commodities markets.  With customers in more than 150 countries, McGraw Hill Financial expects 2012 revenue of approximately $4.4 billion with nearly 40% from international markets.  The Company will provide 2013 financial guidance for McGraw Hill Financial when it announces its 2012 fourth quarter and year-end financial results. Beginning in the fourth quarter of 2012, the Company will classify and report results of McGraw-Hill Education as discontinued operations.  As a result of this transaction, the Company anticipates a non-cash impairment charge in the fourth quarter of approximately $450 to $550 million relating to the School Education Group.