Liana Baker http://blogs.reuters.com/liana-baker Fri, 06 Nov 2015 19:00:20 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.5 Exclusive: Verizon weighing $10 billion sale of enterprise assets – sources http://www.reuters.com/article/2015/11/06/us-verizonenterprise-m-a-idUSKCN0SV2HE20151106?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/liana-baker/2015/11/06/exclusive-verizon-weighing-10-billion-sale-of-enterprise-assets-sources/#comments Fri, 06 Nov 2015 18:07:29 +0000 http://blogs.reuters.com/liana-baker/?p=348 NEW YORK (Reuters) – Verizon Communications Inc (VZ.N: Quote, Profile, Research, Stock Buzz) is exploring a sale of its enterprise assets which could be worth as much as $10 billion, according to people familiar with the matter, as the largest U.S. wireless carrier seeks to focus on its core business.

The sale would include the business formerly known as MCI, which provides landline and Internet services for large business customers, as well as Terremark, its data center unit, the people said this week.

The businesses have struggled to keep up with advances in cloud computing, and faces fierce price competition from players such as Alphabet Inc (GOOGL.O: Quote, Profile, Research, Stock Buzz) and Amazon.com Inc (AMZN.O: Quote, Profile, Research, Stock Buzz).

Verizon’s enterprise assets might not be easy to separate and any potential buyer would likely have to sign commercial agreements with the company, some of the people said. Verizon is still considering how some of these asset sales could best be structured and no deal is imminent, the people added.

Wireline provider CenturyLink Inc (CTL.N: Quote, Profile, Research, Stock Buzz) was in talks with Verizon earlier this year to buy some of the assets but could not agree on terms, the people said. In a strategy shift, CenturyLink announced this week it would instead explore options for some of its data centers, including possibly selling them.

Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) has been advising Verizon on the possible sale of the assets, which have estimated annual earnings before interest, taxes, depreciation and amortization of around $2 billion, the people added.

The sources asked not to be identified because the matter is confidential. Verizon, CenturyLink and Citigroup declined to comment.

The enterprise telecommunications industry has had to adapt in recent years to corporate customers seeking more sophisticated and cheaper offerings to manage their data.

AT&T Inc (T.N: Quote, Profile, Research, Stock Buzz) has been exploring a sale of its data center assets for some time, while Windstream Holdings Inc (WIN.O: Quote, Profile, Research, Stock Buzz) sold its data center business for $575 million to TierPoint last month.

Verizon Chief Financial Officer Fran Shammo said, during the company’s third-quarter earnings call on Oct. 20, that it continues “to work through secular and economic challenges” with its global enterprise division, which posted a 4.9 percent decline in revenue in the quarter ended Sept. 30.

Verizon’s $8.4 billion acquisition of MCI was completed in 2006 following a fierce bidding war with Qwest Communications, which is now part of CenturyLink. It acquired Terremark Worldwide Inc in 2011 for $1.4 billion.

Verizon has been looking to sell other non-core assets as well. In February, it announced the sale of residential landline assets to Frontier Communications (FTR.O: Quote, Profile, Research, Stock Buzz) for $10.54 billion, and unloaded its tower portfolio for more than $5 billion.

(Reporting by Liana B. Baker and Greg Roumeliotis in New York; additional reporting by Malathi Nayak; Editing by Richard Chang)

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Verizon weighing $10 bln sale of enterprise assets -sources http://uk.reuters.com/article/2015/11/06/verizonenterprise-ma-idUKL1N1302PC20151106?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/liana-baker/2015/11/06/verizon-weighing-10-bln-sale-of-enterprise-assets-sources/#comments Fri, 06 Nov 2015 18:04:01 +0000 http://blogs.reuters.com/liana-baker/?p=350 NEW YORK, Nov 6 (Reuters) – Verizon Communications Inc
is exploring a sale of its enterprise assets which could
be worth as much as $10 billion, according to people familiar
with the matter, as the largest U.S. wireless carrier seeks to
focus on its core business.

The sale would include the business formerly known as MCI,
which provides landline and Internet services for large business
customers, as well as Terremark, its data center unit, the
people said this week.

The businesses have struggled to keep up with advances in
cloud computing, and faces fierce price competition from players
such as Alphabet Inc and Amazon.com Inc.

Verizon’s enterprise assets might not be easy to separate
and any potential buyer would likely have to sign commercial
agreements with the company, some of the people said. Verizon is
still considering how some of these asset sales could best be
structured and no deal is imminent, the people added.

Wireline provider CenturyLink Inc was in talks with
Verizon earlier this year to buy some of the assets but could
not agree on terms, the people said. In a strategy shift,
CenturyLink announced this week it would instead explore options
for some of its data centers, including possibly selling them.

Citigroup Inc has been advising Verizon on the
possible sale of the assets, which have estimated annual
earnings before interest, taxes, depreciation and amortization
of around $2 billion, the people added.

The sources asked not to be identified because the matter is
confidential. Verizon, CenturyLink and Citigroup declined to
comment.

The enterprise telecommunications industry has had to adapt
in recent years to corporate customers seeking more
sophisticated and cheaper offerings to manage their data.

AT&T Inc has been exploring a sale of its data center
assets for some time, while Windstream Holdings Inc sold
its data center business for $575 million to TierPoint last
month.

Verizon Chief Financial Officer Fran Shammo said, during the
company’s third-quarter earnings call on Oct. 20, that it
continues “to work through secular and economic challenges” with
its global enterprise division, which posted a 4.9 percent
decline in revenue in the quarter ended Sept. 30.

Verizon’s $8.4 billion acquisition of MCI was completed in
2006 following a fierce bidding war with Qwest Communications,
which is now part of CenturyLink. It acquired Terremark
Worldwide Inc in 2011 for $1.4 billion.

Verizon has been looking to sell other non-core assets as
well. In February, it announced the sale of residential landline
assets to Frontier Communications for $10.54 billion,
and unloaded its tower portfolio for more than $5 billion.

(Reporting by Liana B. Baker and Greg Roumeliotis in New York;
additional reporting by Malathi Nayak; Editing by Richard Chang)

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Bertelsmann to invest $230 mln in U.S. education tech company HotChalk http://www.reuters.com/article/2015/11/06/bertelsmann-hotchalk-idUSL1N1302W520151106?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/liana-baker/2015/11/06/bertelsmann-to-invest-230-mln-in-u-s-education-tech-company-hotchalk/#comments Fri, 06 Nov 2015 07:00:01 +0000 http://blogs.reuters.com/liana-baker/?p=346 Nov 6 (Reuters) – Bertelsmann SE & Co said on
Friday it was spending $230 million to acquire a minority stake
in U.S. learning technology firm HotChalk, the latest move by
Europe’s largest media group to grab a bigger slice of the
education market.

Bertelsmann, which controls broadcaster RTL and co-owns book
publisher Penguin Random House, will become the largest
stockholder in the company. The valuation of the funding round
was not disclosed.

Reuters previously reported that Bertelsmann was going to
lead a funding round that would value the Campbell,
California-based company at $600 million to $800 million. The
company has an annual growth rate in the double digits.

HotChalk, which launched in 2004, helps non-profit
universities and colleges create online graduate degrees and
currently supports 33 online degree programs.

Bertelsmann Chairman and CEO Thomas Rabe said in a statement
that online services is one of the strategic segments the
company wants to focus on in education.

Bertelsmann has recently made education a third pillar of
its business alongside media and services, in a bid to grow its
presence in the fragmented $5.5 trillion global market for
education, in which the biggest single player is Britain’s
Pearson. Bertelsmann announced in September that it was
creating a new business unit that will be run like a separate
company to focus on education with a revenue target of 1 billion
euros ($1.1 billion.)

HotChalk is one of a number of companies such as Coursera
and Udacity, another Bertelsmann-backed company, that have
sprung up in recent years to help bring universities courses
online to a greater number of students.

The company added seven customers this year, with three more
on the way next year, HotChalk CEO Ed Fields said in an
interview. HotChalk works with Concordia University-Portland
based in Oregon, which uses it to help run its online master and
doctorate of education degree programs.

It’s the largest funding round to date for HotChalk and its
last investment since 2012 when venture capital firm Mohr
Davidow, a previous investor, put more money into the company.

“We’ve aligned with a global platform, Bertelsmann, to
continue to lead the discussion around improving outcomes in
education and making sure students get the results they
bargained for when they enrolled in university,” Fields said.

Financial advisers on the deal were Morgan Stanley
for Bertelsmann and Citigroup Inc for HotChalk.

Last week, Bertelsmann’s online training company, Relias
Learning, which it bought for $540 million last year, said it
was acquiring Redilearning, a U.S. company that focuses on
online training in the senior care sector.

(Reporting by Liana B. Baker in New York; Editing by Ken Wills)

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Exclusive: Dell eyes $10 billion asset sales ahead of EMC merger – sources http://www.reuters.com/article/2015/11/03/us-dell-assetsales-exclusive-idUSKCN0SS02Y20151103?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/liana-baker/2015/11/02/exclusive-dell-eyes-10-billion-asset-sales-ahead-of-emc-merger-sources/#comments Tue, 03 Nov 2015 01:21:34 +0000 http://blogs.reuters.com/liana-baker/?p=343 NEW YORK (Reuters) – Dell Inc is preparing to sell around $10 billion in non-core assets, including software and services, to reduce the heavy debt load it will be taking on to buy EMC Corp (EMC.N: Quote, Profile, Research, Stock Buzz), according to people familiar with the matter.

Dell, which will assume $49.5 billion of debt once the merger with EMC is completed, has communicated the plan to credit rating agencies in recent days, the people said on Monday.

Assets Dell could sell include Quest Software, which helps with information technology (IT) management; SonicWall, an e-mail encryption and data security provider; back-up solutions unit AppAssure; as well as IT services provider Perot Systems, the people said.

The divestitures will not include Dell’s hardware assets such as servers, which are crucial in its quest to dominate the large enterprise market through its merger with EMC, as well as compete more effectively with the likes of Cisco Systems Inc (CSCO.O: Quote, Profile, Research, Stock Buzz) and International Business Machines Corp (IBM.N: Quote, Profile, Research, Stock Buzz), the people added.

The sources asked not to be identified because the deliberations are confidential. A Dell spokesman declined to comment.

Dell agreed last month to buy data storage company EMC for $67 billion, in a move that would transform the No. 3 computer maker into a leader in storing corporate data and shift its business away from the stagnant consumer personal computer market.

The transaction is expected to close between May and October 2016. Dell has stated that the combined company will focus on reducing its debt during the first 18 to 24 months after the merger to achieve an investment-grade credit rating.

Dell and its shareholders, including founder Michael Dell and private equity firm Silver Lake Partners LP, are contributing $4.25 billion in equity to the deal.

Dell has agreed to pay $24.05 cash per share for EMC, and will also give EMC shareholders a special stock that tracks the share price of VMWare Inc (VMW.N: Quote, Profile, Research, Stock Buzz), the maker of cloud-based virtualization software majority-owned by EMC.

VMWare shares have lagged since the deal was announced, weighing on the overall value of the deal.

When Dell’s acquisition of EMC was announced on Oct. 12, the deal valued the latter at $33.15 per share. EMC ended Monday at $26.35 on the New York Stock Exchange, reflecting investor concern that the merger may not be completed under the tracking stock structure.

(Reporting by Liana B. Baker and Greg Roumeliotis in New York; Editing by Richard Chang)

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Dell eyes $10 billion asset sales ahead of EMC merger -sources http://www.reuters.com/article/2015/11/03/dell-assetsales-idUSL1N12Y04E20151103?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/liana-baker/2015/11/02/dell-eyes-10-billion-asset-sales-ahead-of-emc-merger-sources/#comments Tue, 03 Nov 2015 01:18:30 +0000 http://blogs.reuters.com/liana-baker/?p=341 NEW YORK (Reuters) – Dell Inc is preparing to sell around
$10 billion in non-core assets, including software and services,
to reduce the heavy debt load it will be taking on to buy EMC
Corp, according to people familiar with the matter.

Dell, which will assume $49.5 billion of debt once the
merger with EMC is completed, has communicated the plan to
credit rating agencies in recent days, the people said on
Monday.

Assets Dell could sell include Quest Software, which helps
with information technology (IT) management; SonicWall, an
e-mail encryption and data security provider; back-up solutions
unit AppAssure; as well as IT services provider Perot Systems,
the people said.

The divestitures will not include Dell’s hardware assets
such as servers, which are crucial in its quest to dominate the
large enterprise market through its merger with EMC, as well as
compete more effectively with the likes of Cisco Systems Inc
and International Business Machines Corp, the
people added.

The sources asked not to be identified because the
deliberations are confidential. A Dell spokesman declined to
comment.

Dell agreed last month to buy data storage company EMC for
$67 billion, in a move that would transform the No. 3 computer
maker into a leader in storing corporate data and shift its
business away from the stagnant consumer personal computer
market.

The transaction is expected to close between May and October
2016. Dell has stated that the combined company will focus on
reducing its debt during the first 18 to 24 months after the
merger to achieve an investment-grade credit rating.

Dell and its shareholders, including founder Michael Dell
and private equity firm Silver Lake Partners LP, are
contributing $4.25 billion in equity to the deal.

Dell has agreed to pay $24.05 cash per share for EMC, and
will also give EMC shareholders a special stock that tracks the
share price of VMWare Inc, the maker of cloud-based
virtualization software majority-owned by EMC.

VMWare shares have lagged since the deal was announced,
weighing on the overall value of the deal.

When Dell’s acquisition of EMC was announced on Oct. 12, the
deal valued the latter at $33.15 per share. EMC ended Monday at
$26.35 on the New York Stock Exchange, reflecting investor
concern that the merger may not be completed under the tracking
stock structure.

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Web company Endurance in $1.1 billion deal for Constant Contact, shares dip http://www.reuters.com/article/2015/11/02/us-constant-contact-m-a-endurance-intl-idUSKCN0SR1BC20151102?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/liana-baker/2015/11/02/web-company-endurance-in-1-1-billion-deal-for-constant-contact-shares-dip/#comments Mon, 02 Nov 2015 20:39:37 +0000 http://blogs.reuters.com/liana-baker/?p=339 By Anya George Tharakan and Liana B. Baker

(Reuters) – Endurance International Group Holdings Inc said it would buy email marketer Constant Contact Inc in a $1.1 billion deal on Monday that surprised investors and sent shares lower by 20 percent.

Endurance International’s Chief Executive Hari Ravichandran said in an interview that buying Constant Contact is a sound investment that will give the company access to 500,000 new customers.

“I think the market will start to understand it a little bit better, but there’s definitely a knee-jerk reaction. The unknown always causes anxiety to public investors,” he said.

The deal, which is Endurance’s largest to date, will add Constant Contact’s online marketing tools such as email marketing, events management and social media integration to Endurance’s portfolio of Web-hosting software for small and medium-sized businesses.

Endurance, whose brands include BigRock, HostGator and FatCow.com, already has an agreement to provide Constant Contact’s email marketing tools to its subscribers.

Cowen analyst Gregg Moskowitz said in a research note that revenue synergies of the deal look limited and he questioned how many of Endurance’s small business customers will be willing to pay for Constant Contact’s solutions.

Constant Contact’s shares were trading 22 percent higher, up $5.78, at $31.88 in afternoon trading on Monday. Endurance slipped nearly 20 percent to $10.72 per share. [nGNXVESUYa]

Constant Contact was founded as “Roving Software” in 1995 in an attic in Brookline, Massachusetts. Its shares plunged in April after it reported dismal subscriber additions.

Endurance’s offer of $32 per share in cash represents a 22.6 percent premium to Constant Contact’s close on Friday, but is well below the stock’s record-high of $43.18 in August.

Constant Contact’s merger agreement has a “go-shop” provision where it can solicit other offers until Nov. 21, according to a regulatory filing.

The deal is expected to close in the first quarter of 2016.

Constant Contact targets small businesses and non-profit organizations, offering them colorful templates to advertise products through emails.

The company, which was called BizLand before the dot.com bust, now has over 3 million subscribers. With the deal, it expects boosting its paying subscribers to over 5 million.

Endurance lowered its adjusted revenue forecast for 2015 to $745 million-$750 million, below the average analyst estimate of $751.9 million, according to Thomson Reuters I/B/E/S.

It had previously forecast adjusted revenue of $745 million-$755 million.

Goldman Sachs, Credit Suisse and Allen & Co were financial advisers for Endurance, while Morgan Stanley and Raymond James advised for Constant Contact.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Saumyadeb Chakrabarty and Alan Crosby)

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Fuse cable channel hires advisers to explore sale http://www.reuters.com/article/2015/10/30/us-fuse-m-a-idUSKCN0SO2P620151030?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/liana-baker/2015/10/30/fuse-cable-channel-hires-advisers-to-explore-sale/#comments Fri, 30 Oct 2015 20:35:37 +0000 http://blogs.reuters.com/liana-baker/?p=337 By Liana B. Baker

(Reuters) – Cable TV channel Fuse which counts music star Jennifer Lopez as an investor said on Friday it had hired advisers to explore strategic options after receiving interest from third parties.

“As a result of the company’s success and multiple inquiries from interested third parties, the company felt it prudent to retain advisors to explore strategic options,” a Fuse spokesman said in a statement.

Fuse has hired LionTree Advisors LLC and Jefferies LLC to assist on a potential sale of the company which could be valued at about $300 million, according to people familiar with the matter who asked not to be named because the details on the sales process were not public.

The investment banks could not be reached for comment and Fuse did not respond to a request for comment on the valuation or banks.

NuvoTV, backed by private equity firms Columbia Capital and Rho Capital Partners, acquired Fuse last year in 2014 from Madison Square Garden Company (MSG)(MSG.N: Quote, Profile, Research, Stock Buzz) for $226 million. MSG also kept a 15 percent equity stake in the company as part of the deal.

Following the deal, NuvoTV took on Fuse’s brand and merged its content into the new channel, which features a mix of reality shows and music programming.

Bloomberg was first to report that Fuse was exploring strategic options on Friday.

(Reporting by Liana B. Baker; Editing by Andrew Hay)

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MGM Resorts to form REIT with 10 properties http://www.reuters.com/article/2015/10/29/us-mgm-resorts-intl-divestiture-idUSKCN0SN1DO20151029?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/liana-baker/2015/10/29/mgm-resorts-to-form-reit-with-10-properties/#comments Thu, 29 Oct 2015 17:21:51 +0000 http://blogs.reuters.com/liana-baker/?p=335 By Ankit Ajmera and Liana B. Baker

(Reuters) – MGM Resorts International (MGM.N: Quote, Profile, Research, Stock Buzz) said on Thursday that it would form a publicly traded real estate investment trust made up of 10 properties, including the Mirage and Mandalay Bay, and its shares rose as much as 7.5 percent.

MGM had been under pressure from shareholder Land and Buildings earlier this year to convert its real estate assets into a REIT and spin off its business in China.

“We wanted to create a vehicle and a financing platform by which we could lower our cost to capital and raise funds for future growth opportunities,” Chief Executive Officer Jim Murren said on a conference call.

The company, whose long-term debt was $12.80 billion as of Sept. 30, said it would transfer $4 billion of that to the new REIT, MGM Growth Properties LLC.

MGM, which will own about 70 percent of the REIT, said the 10 properties together have more than 24,000 hotel rooms. For the part of the REIT it will not own, the company will offer shares that it will list on the New York Stock Exchange, Murren added in an interview.

Murren will be chairman of the REIT, which will have a separate board and CEO.

MGM’s balance sheet has been overleveraged since the recession, and this deal will help the company reduce debt that would have been difficult to pay down because of its high cash flow needs, Macquarie Research analyst Chad Beynon said.

Apart from the Mirage and Mandalay Bay, four other Las Vegas resorts – Monte Carlo, New York-New York, Luxor and Excalibur – will be a part of the REIT. They accounted for about 42 percent of MGM’s wholly owned domestic resorts’ revenue so far this year.

The REIT will also include MGM’s Park entertainment district in Las Vegas and three other U.S. resorts.

The company said it expected to complete the REIT transaction in the first quarter of 2016. It plans to retain full ownership of the Bellagio and MGM Grand Las Vegas properties.

MGM also reported a higher-than-expected quarterly profit. Earnings came to 12 cents per share in the third quarter, three times more than the analysts’ average estimate.

The company also said it was considering selling all or part the Las Vegas mall Crystals, which had attracted “quality” offers.

“We think it is worth over $1 billion,” Murren said on the call.

(Adds dropped word “chairman” in paragraph 6)

(Reporting by Ankit Ajmera in Bengaluru and Liana B. Baker in New York; Writing by Sayantani Ghosh; Editing by Don Sebastian and Savio D’Souza)

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Exclusive: McGraw Hill explores sale of J.D. Power unit http://www.reuters.com/article/2015/10/28/us-jdpower-m-a-mcgraw-hill-finl-idUSKCN0SM2M620151028?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/liana-baker/2015/10/28/exclusive-mcgraw-hill-explores-sale-of-j-d-power-unit/#comments Wed, 28 Oct 2015 19:12:16 +0000 http://blogs.reuters.com/liana-baker/?p=331 By Liana B. Baker and Jessica Toonkel

(Reuters) – McGraw Hill Financial Inc (MHFI.N: Quote, Profile, Research, Stock Buzz) is exploring a sale of customer satisfaction measurement unit J.D. Power and Associates, according to people familiar with the matter, in the financial data company’s latest move to reshuffle its portfolio.

McGraw Hill has hired Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) to assist with the sale process, the people said this week. J.D. Power, best known for its car quality and reliability ratings, could be worth as much as $1 billion, one of the people added.

J.D. Power may appeal to private equity firms as well as companies in the automotive sector such as Cox Enterprises, which owns Autotrader, an online car marketplace, and Manheim Auctions, one of the largest car auction companies.

The sources asked not to be identified because the sale process is confidential. Representatives from McGraw Hill Financial, Morgan Stanley and Cox Enterprises declined to comment.

J.D. “Dave” Power and his wife Julie started the eponymous company in 1968 from their home in Calabasas, California, and later landed Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) as their first client. It now employs 7000 analysts, statisticians, consultants and other experts in 12 offices globally. McGraw Hill, which has a market capitalization of $25.5 billion, bought the company in 2005 for an undisclosed sum.

Some of J.D. Power’s most-read reports rate new and used cars, but it has also branched out to other sectors such as airlines, credit card companies and cable operators. For the past few years, it has faced competition from newer entrants that collect data on customer service.

The Westlake Village, California-based company generated $265 million in revenue in 2013, with the majority of its business coming from the automotive sector, according to a presentation on its website.

It is part of McGraw Hill’s commodities and commercial markets segment, which also includes the energy and metals data company Platts. That unit’s revenue grew 6 percent to $893 million and had an adjusted operating profit of $306 million last year.

McGraw Hill has been reshuffling its portfolio since it sold its education business to Apollo Global Management LLC (APO.N: Quote, Profile, Research, Stock Buzz) in 2013 for $2.4 billion in cash.

It also bought financial data company SNL Financial for $2.23 billion, in a deal that closed in September.

McGraw Hill sold its construction business last year for $320 million in cash to private equity firm Symphony Technology Group.

(Reporting by Liana B. Baker and Jessica Toonkel in New York; Editing by Christian Plumb)

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Exclusive: McGraw Hill explores sale of J.D. Power unit – sources http://uk.reuters.com/article/2015/10/28/jdpower-m-a-mcgraw-hill-finl-exclusive-idUKKCN0SM2M220151028?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/liana-baker/2015/10/28/exclusive-mcgraw-hill-explores-sale-of-j-d-power-unit-sources/#comments Wed, 28 Oct 2015 19:11:17 +0000 http://blogs.reuters.com/liana-baker/?p=333 By Liana B. Baker and Jessica Toonkel

(Reuters) – McGraw Hill Financial Inc is exploring a sale of customer satisfaction measurement unit J.D. Power and Associates, according to people familiar with the matter, in the financial data company’s latest move to reshuffle its portfolio.

McGraw Hill has hired Morgan Stanley to assist with the sale process, the people said this week. J.D. Power, best known for its car quality and reliability ratings, could be worth as much as $1 billion, one of the people added.

J.D. Power may appeal to private equity firms as well as companies in the automotive sector such as Cox Enterprises, which owns Autotrader, an online car marketplace, and Manheim Auctions, one of the largest car auction companies.

The sources asked not to be identified because the sale process is confidential. Representatives from McGraw Hill Financial, Morgan Stanley and Cox Enterprises declined to comment.

J.D. “Dave” Power and his wife Julie started the eponymous company in 1968 from their home in Calabasas, California, and later landed Toyota Motor Corp as their first client. It now employs 7000 analysts, statisticians, consultants and other experts in 12 offices globally. McGraw Hill, which has a market capitalization of $25.5 billion, bought the company in 2005 for an undisclosed sum.

Some of J.D. Power’s most-read reports rate new and used cars, but it has also branched out to other sectors such as airlines, credit card companies and cable operators. For the past few years, it has faced competition from newer entrants that collect data on customer service.

The Westlake Village, California-based company generated $265 million in revenue in 2013, with the majority of its business coming from the automotive sector, according to a presentation on its website.

It is part of McGraw Hill’s commodities and commercial markets segment, which also includes the energy and metals data company Platts. That unit’s revenue grew 6 percent to $893 million and had an adjusted operating profit of $306 million last year.

McGraw Hill has been reshuffling its portfolio since it sold its education business to Apollo Global Management LLC in 2013 for $2.4 billion in cash.

It also bought financial data company SNL Financial for $2.23 billion, in a deal that closed in September.

McGraw Hill sold its construction business last year for $320 million in cash to private equity firm Symphony Technology Group.

(Reporting by Liana B. Baker and Jessica Toonkel in New York; Editing by Christian Plumb)

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