As the sale of these two huge groups rolls along it looks likely that Thomson may be sold first. Amongst the scrum of usual suspects in the Thomson race are:

• KKR
• Carlyle
• Warburg Pincus
• Blackstone, Bain and Thomas H Lee
• Bertlesmann
• Holtzbrink

There may yet be some new bidders or even consortia formed by these companies. One of the interesting bids may come from Blackstone, Bain and Thomas H Lee, who know education and have plenty of money having recently sold Houghton Mifflin to Riverdeep. Riverdeep are also thought to be a possible bidder for Harcourt, but we suspect that this may be too much of a stretch for a company trying to bed down a £1.8bn reverse takeover.

Two wildcard bidders for Thomson are thought to be the Apollo Group, who run the hugely successful University of Phoenix, and Google. Google would certainly have the funds although the fit with their strategy is less obvious. Apollo would probably be very keen to get its hands on Thomson because of its joint venture Universitas 21 Global, the online university it runs with the Universitas 21 consortia.

Traditionally, the deal for Thomson Learning, expected to be around US$5bn (£2.5bn), would have looked way out of reach for a company like Apollo whose market capitalisation is about US$6.5bn (£3.2bn). However, the Riverdeep and Sallie Mae deals showed that in a market awash with private equity funds, smaller cap companies can successfully bid for far larger entities.

Google has all the technology that would scale up Thomson Learning’s offerings, particularly its testing business and imagine what a great distribution channel it would be for Universitas 21 Global. It would also be able to bring a whole new scale to the concept of customised content that may have strong appeal to both institutions and authors. The latter group are important to Google because their trade association, The Authors Guild, are suing Google over its Google Library programme which they claim is digitizing copyrighted books from libraries without the authors’ permission. With Google Library described by one party to the litigation as ‘massive copyright infringement’, anything Google could do via its ownership of Thomson might also go some way to achieving its own ‘Do No Evil’ goal, something widely derided by authors and publishers.

www.apollogrp.edu

www.authorsguild.org
www.google.com
www.u21global.com