Textbook deal ‘all about the kids’
TECHNOLOGY
• Nelson Education Ltd., which calls i t self “Canada’s l eading e ducational publisher,” has reached a deal to acquire the kindergarten- to-- Grade-12 businesses of one of its main rivals, McGrawHill Ryerson. The merger will consolidate the lion’s share of textbook publishing in the hands of one Toronto- based company.
“It’s all about the kids,” said Steve Brown, chief executive at Nelson, which has a 103- year history as a textbook publisher in Canada. “It’s all about kids graduating with better scores.”
Nelson already has a potent position in terms of the books and educational materials used by students across Canada, Brown said in an interview from Ottawa. “Ninety- two per cent of kids graduating high school in Canada have been taught on Nelson resources.”
Nelson will take over all the development, production, sales, distribution and marketing f or McGrawHill’s publishing division for books for grade school and high school, according to a news release.
That includes McGrawHill’s books for math, science, English, fine arts, music, social sciences and technology.
Terms of the deal were not disclosed.
Brown insisted that the takeover will not drive up the price that school boards across Canada pay for textbooks.
“We have cancelled all price increases,” said Brown, who took over running Nelson nine months ago. “We have been reducing prices across Canada. With our warehouse and supply chain, you gain greater economies of scale. It’s not about pushing prices up.”
He gave the example of a textbook Nelson published a month ago, called Mechanistic Chemistry, written by William Ogilvie, an assistant professor of chemistry at the University of Ottawa. Nelson’s former organic chemistry text retailed for $ 180; the new book sells for $100.
“We want to make books a better value,” Brown said.
Ogilvie said that he enjoyed working with Nelson to publish the book, though “it took a lot longer than I expected.” Brown added that even with the merger, there are plenty of players in the textbook business, at least at the university level.
“There are six or seven publishers of the books we deal with,” Ogilvie said.
Nelson said the acquisition is subject to the satisfaction of the requirements of the Investment Canada Act.
Sabrina Foran, a spokeswoman at the federal ministry of Innovation, Science and Economic Development, said the deal falls under “cultural business” and would be reviewed by Heritage Canada.
Nelson estimated that the review would take four weeks.
Nelson, which employs about 500 people, will take over about 30 publishing, editorial and sales people from McGraw- Hill Ryerson. His long-term vision, he said, is to transform Nelson from a publisher of physical books to a publisher of educational resources in an increasingly digital world. That process is bearing fruit, because even as kids need less physical textbooks, they need just as many learning resources, he said.
“We have hockey-sticked,” he said, “and we are turning around, we are starting to go back up onto the positive (revenue) side.”
Brown said he spent a lot of time in New York negotiating the deal with the parent, McGraw Hill.
“They were focused on the safe harbour of their people,” he said.
Nelson became a standalone privately held company in Canada two years ago after the publisher filed for bankruptcy in Canada. Apax Partners and Omers Private Equity Inc. relinquished ownership of Nelson in April, 2015, in favour of a group of creditors. Nelson’s current owners include Ares Management, Mudrick Capital Management and Sound Point Capital Management.
McGraw- Hill, based in New York, acquired Torontobased Ryerson Publishing in 1970.
The company’s Canadian textbook division is based in Mississauga, Ont. McGrawHill will continue to publish textbooks for university students in Canada.
“Looking ahead for McGraw- Hill Education, we will continue to seek longterm growth opportunities in Canada by focusing our resources and investments on offering innovative new products and services in the higher education market,” Aaron Yaverski, managing director for the Americas at McGraw-Hill Education, said in a news release.