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Veritas Capital's affiliate, Harbor Purchaser Inc., has extended its cash tender offer for Houghton Mifflin Harcourt Company (HMHC) shares to April 6, 2022, at $21.00 per share. The extension addresses an 'inside date condition' ensuring adequate time for debt financing marketing. By March 28, 2022, approximately 1,803,547 shares (0.6% of total) were tendered. The offer is not contingent on financing. Interested shareholders are encouraged to review the Offer documents filed with the SEC on March 7, 2022.
Engine Capital LP, a long-term shareholder of Houghton Mifflin Harcourt Company (HMHC), opposes Veritas Capital's $21 per share tender offer, arguing it undervalues the company at 7.6x 2024 unlevered free cash flow. They claim the process was flawed and highlight that Veritas may achieve a 5-year internal rate of return (IRR) of 31%-37%, indicating a transfer of value from HMHC shareholders. Engine proposes a Dutch tender offer between $21 and $22 per share, potentially raising the share price to $42 within three years.
Engine Capital LP, a notable stakeholder in Houghton Mifflin Harcourt Company (HMHC), announced its refusal to accept a $21 per share offer from Veritas Capital, arguing it undervalues the company. Engine Capital alleges flaws in the sale process, emphasizing that many bidders withdrew after seeing misleading initial forecasts. They propose a Dutch tender offer between $21 and $22 per share instead, which they argue would better serve shareholders. Engine Capital also intends to nominate directors to ensure the execution of this plan and maintain current management leadership.
The shareholder Prasad Phatak has expressed his discontent with Houghton Mifflin Harcourt Company's Board of Directors regarding their recommendation to accept Veritas Capital's tender offer of $21.00 per share. He argues that this valuation significantly undervalues the company, given its growth potential and recent positive financial performance. Phatak, who holds nearly double the shares of all independent directors combined, prefers that HMHC remain public and allow management more time to enhance shareholder value.
HMH reported significant growth in its Q4 and full year 2021 financial results, with net sales rising to $179 million for Q4 and $1,051 million for the full year, reflecting 26.7% and 25.0% increases, respectively. Billings surged 42.0% in Q4 to $132 million and 23.5% for the year to $1,110 million. Adjusted EBITDA for Q4 improved to $24 million compared to a loss in 2020, and free cash flow turned positive at $47 million. The company experienced a notable increase in operating cash flow, up 75.7% for the year.
Breach Inlet Capital believes that Veritas Capital’s offer of
Houghton Mifflin Harcourt Company (HMHC) has entered into a definitive merger agreement with Veritas Capital, securing a cash purchase price of $21 per share, which is a 36% premium over the company's stock price as of January 13, 2022. This acquisition values HMH at approximately $2.8 billion. The deal, approved by HMH's Board of Directors, aims to enhance HMH's growth strategy through Veritas's industry expertise. The merger is expected to finalize in the second quarter of 2022, pending regulatory approvals.
HMH (Nasdaq: HMHC) announced the release of its fourth quarter and full year 2021 results on Feb. 24, 2022, before market open. A conference call will be held at 9:30 a.m. ET to discuss these results, available via webcast. HMH, a learning technology company, serves over 50 million students and 3 million educators in 150 countries, focusing on K–12 solutions. The release also includes forward-looking statements about the company's outlook and potential risks, especially related to the ongoing impacts of the COVID-19 pandemic.
HMH announced its participation in the Citi AppsEconomy Conference 2022, where President and CEO Jack Lynch and CFO Joe Abbott will speak. The event is set for January 5, 2022, at 4 p.m. ET, with a live webcast available on the company's website. A replay of the event will be accessible for 30 days. HMH is committed to enhancing educational outcomes globally, serving over 50 million students and 3 million educators in 150 countries. More information is available at www.hmhco.com.
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