McGraw-Hill Cos., owner of Standard & Poor’s, has “underperformed its potential” and should break into four parts, according to a proposal by shareholders Jana Partners LLC and Ontario Teachers’ Pension Plan.
The shareholders presented a plan to separate the company into four units — S&P, the S&P index business, information & media, and education — as well as buy back more shares, Jana said late Monday in a regulatory filing.
McGraw-Hill officials, who met with the shareholders Monday in New York, didn’t respond to the proposal, said a person with knowledge of the talks who declined to be named. The company is considering dividing in two, with the education publishing unit being spun off or sold, the person said. Jana and Ontario Teachers’, whose shares are managed by Jana, together own a 5.2% stake and said they want to boost shareholder value.
A spokesman for Jana, a New York-based hedge fund, didn’t return a call seeking comment. Lydya Castillo, a spokeswoman for the C$107.5 billion (U.S. $108.8 billion) Ontario Teachers plan in Toronto, didn’t return a call.
McGraw-Hill wouldn’t comment on specific talks with shareholders, Patti Rockenwagner, a spokeswoman for the New York-based company, said in a statement.
CEO Terry McGraw said last month that the company is conducting a strategic portfolio review. “McGraw-Hill’s portfolio review is well advanced and expected to result in significant actions in the next few months to accelerate global growth, align appropriate cost structures and build shareholder value,” according to the statement.
The company “has consistently underperformed its potential and traded at a sizable discount,” Jana said in the filing. In particular, it said the education unit is a “drag” on the company’s value.