Cengage and McGraw-Hill, the second and third largest college textbook companies in the United States, said they have ended their merger plan that was first announced a year ago.
The proposed merger of the two New York City-based publishing giants would have created the nation’s second-largest supplier of physical textbooks, course materials, study guides, and subscription services of digital educational contents. The combined entity would have been led by Cengage CEO Michael Hansen.
“Although we are disappointed that we were unable to finalize the merger, the opportunity ahead remains significant,” said Hansen in a Monday statement.
The decision to terminate all merger efforts was “unanimously approved” by the board of directors of both companies, according to a press release. Under the terms of the merger agreement, neither Cengage nor McGraw-Hill will have to pay any break fee.
Cengage and McGraw-Hill said their merger would have allowed them to make textbooks and course materials more affordable to students. “Together, we will be even better positioned to create new, locally impactful products that use leading educational technology to improve learning experiences and outcomes,” read a now-defunct website that has been heavily promoted.
Despite the companies’ promises, numerous consumer rights organizations, higher-education groups, and government officials in the English-speaking world have voiced their worries throughout the past year, arguing that the merger would further reduce competition in an already highly concentrated market and ultimately raise textbook prices for students.
In the United States, the Department of Justice (DOJ) reviewed the merger and told Cengage and McGraw-Hill it had “serious concerns” that combining the two would harm competition. In Britain, an investigation into the deal by the Competition and Markets Authority concluded that it could “lead to students paying more for essential textbooks and educational materials.” Competition and consumer agencies in Australia and New Zealand also expressed concerns about the merger.
“American students were our primary concern when evaluating the possible competitive effects of this deal,” Makan Delrahim, the assistant attorney general of the DOJ’s Antitrust Division, said in a statement. “The decision to abandon this merger preserves competition in the market for textbook publishing, an important industry in the education sector. Cengage and McGraw-Hill’s decision to abandon this merger also preserves innovation, as the two firms compete aggressively in the development of courseware technology.”
“The failed Cengage and McGraw-Hill merger is a big win for students, faculty, and other community members at America’s colleges and universities,” said Kaitlyn Vitez, director of consumer group U.S. PIRG. “We’re glad to see that the U.S. Department of Justice and regulators in other English-speaking countries raised serious questions about the wisdom of allowing this merger to move forward, and that student advocacy, media pressure, and legal action pushed the publishers to abandon their plan to consolidate the college textbooks market further.”