McGraw-Hill set to split into two listed companies

MCGRAW-HILL, agreeing to investor demands to “unlock shareholder value”, said yesterday it will divide itself into a markets data company that includes its Standard & Poor’s ratings businesses and an education company for textbook publishing.

The breakup of the mini-conglomerate follows public demands starting in July from the Ontario Teacher's Pension Fund and hedge fund Jana Partners for a broad reorganisation.

The activists suggested breaking up the company into more than two pieces to highlight the value of its individual equities, commodities and financial analytics units.

“It’s a first step,” said Pat English, chief executive of Fiduciary Management, a large holder of McGraw-Hill shares, who argued for a more radical plan. “It doesn’t make sense to have S&P Credit Ratings, S&P Indices, Capital IQ, Platts and other information companies under one roof,” English wrote in an e-mail.

Terry McGraw, the 63-year-old chairman and chief executive of the company founded by his great-grandfather, said he will lead the bigger and more profitable part of the company that will include the S&P credit rating, market index and Capital IQ corporate and markets analytics businesses.