Jana Demands McGraw-Hill Split In Four, S&P In Two

Aug 23 2011 | 10:23am ET

Jana Partners isn't known for pulling its punches, and the hedge fund and its activist partner certainly didn't in calling for the McGraw-Hill Cos. to be split in four.

New York-based Jana and the Ontario Teachers' Pension Plan revealed a 5.2% stake in the publisher earlier this month and began to agitate for the breakup. Yesterday, they presented the company with a much more radical plan than that being considered by McGraw-Hill.

Whereas the New York-based company, which is already seeking a buyer for its broadcasting unit, is looking into selling or spinning off its educational publishing business, Jana and OTPP want one to become four, including splitting Standard & Poor's in twain.

Under the Jana-OTPP plan, McGraw-Hill would be divided into S&P, and information and media business and the education unit. In addition, S&P would be split, with the indexing business going its own way.

McGraw-Hill "has consistently underperformed its potential and traded at a sizable discount," Jana complained in its filing announcing the meeting. McGraw-Hill did not comment on the confab.

Separately, the company announced yesterday that S&P president Deven Sharma is stepping down by the end of the year and will be replaced by Citigroup executive Douglas Peterson. The leadership change at the company has been planned and is unrelated to Jana's push, S&P's controversial downgrade of long-term U.S. sovereign debt or the related Justice Dept. investigation into the company.

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