Buyout battle looms for Thomson division

Some of the world’s biggest buyout firms are set to fight it out for the $3.5 billion-valued higher education division of publishing company Thomson, in the latest demonstration of private equity’s appetite for the sector.

Kohlberg Kravis Roberts and The Carlyle Group are reportedly the latest to join the battle for the higher education arm of publisher Thomson Learning, in an auction expected to see fierce competition between private equity firms and trade buyers.

KKR and Carlyle have both launched their own bids for the division, according to London-based newspaper The Times. Other interested parties are thought to include Apax Partners, Warburg Pincus and a consortium of The Blackstone Group, Bain Capital and Thomas H Lee.

Bain, Blackstone and TH Lee have previously collaborated to buy Houghton Mifflin, another educational publisher, which the three firms sold to Irish publisher Riverdeep for $5 billion last year.

Apax has also been active in the publishing sector, with recent deals including the acquisition of Incisive Media last year.

However, trade buyers could yet prevent the division falling into private equity hands. German media giant Bertelsmann is also reportedly involved in the auction. Reuters reported that it was looking to team up with the consortium, but it has also been linked with a joint bid alongside Blackstone, or with Holtzbrinck, another German publisher.

The division, which is expected to be valued at about $3.5 billion, is the largest part of the Thomson Learning business, which has a total value of about $5 billion in total. Last year the business as a whole recorded sales of $2.4 billion, with profits of $383 million.

Private equity firms have been attracted to the educational publishing sector because of its stable long-term revenues and the growing market for educational literature around the world.