activist investors force McGraw-Hill to split into two listed companies

[evitaperon]

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

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<p>[McGraw-Hill</a> to split into two listed companies | Reuters](<a href=“http://www.reuters.com/article/2011/09/13/us-mcgrawhill-idUSTRE78B1Y620110913]McGraw-Hill”>http://www.reuters.com/article/2011/09/13/us-mcgrawhill-idUSTRE78B1Y620110913)</p>

<p>These activist investors comprise have about 15% (so far) stake in the company. Activist investing is an interesting strategy in educational reform, and in this case appears to be the product of an unlikely alliance of teachers (with educational interests) and a hedge fund (with a financial interest). As an activist investor,can nucleate other shareholders around you and force management votes and proxy battles, and cause massive headaches for management, who will often have a large risk of being voted out, and if they do not, they will make concessions to activists to reform their company policies and educational products. Activist investing is relatively cheap: you can heavily influence the policies and products of an entire company with a small stake, as opposed to having to deal with expensive acquisitions and poison pills and golden parachutes and other takeover defences on top of the already-expensive acquisition.</p>