Veronis Suhler Buys Education Co.

Target: Cambium Learning Inc.

Price: $300 million to $325 million

Sponsor: Veronis Suhler Stevenson

Seller: J.H. Whitney & Co.

Financial Advisor: Seller: Credit Suisse; Sponsor: KPMG LLP

Legal Counsel: Sponsor: Lowenstein Sandler PC

Veronis Suhler Stevenson has made its second education deal in a year, this time a bet on teaching the country’s most needy students.

On Jan. 29, for a reported sum of between $300 million and $325 million, the New York buyout shop inked a deal to acquire a majority equity stake in Cambium Learning Inc., a Natick, Mass.-based provider of education products for special-needs and at-risk students. The seller was buyout shop J.H. Whitney & Co. The deal is expected to close in March or April, said Scott Troeller, a partner with Veronis Suhler.

The firm bought the company using its 2006-vintage $1.3 billion VSS Communications Partners IV, which also owns two other education companies. They are Infobase, a New York-based reference database publisher for school libraries, acquired in 2005; and Granada Learning, a U.K.-based provider of supplemental education, software and testing that the firm acquired last year.

Cambium, a national firm with offices across the country, provides textbooks, technology and teacher training to help get kids who have fallen behind their peers in math or reading get back to their appropriate grade level. It also helps those with special needs, like the vision-impaired, for whom it makes recognition software that converts text into sounds. The market for such services is huge, said Troeller. “About 40% of all students in the country are currently not reading” at their appropriate grade level, he said, adding that “in some inner cities, that number could be as high as 80%.” Most of the products Cambium sells go to public schools, a spokeswoman said.

Veronis Suhler Stevenson’s investment strategy is to buy platform companies, then to grow them both organically and through add-on acquisitions. In Cambium’s case, the buyout firm will be looking both to develop new products and to seek add-ons. President George W. Bush’s 2002 educational reform measure, the “No Child Left Behind Act,” highlights political concern over education that is expected to increase demand for Cambium’s products, said Troeller. Current school curricula, he said, are not designed to help special-needs children.

Former Houghton Mifflin Co. executives David Cappellucci, Nader Darehshori and George Logue founded Cambium in 2002. Cappellucci, who is the chief operating officer, also plans to take the title of chief executive officer upon the closing of the deal. He will take over from Jonathan Newcomb, who was hired in March 2006 to guide the company through the sale process, and who will step down from his position once the deal closes. Logue is executive vice president, while Darehshori, the former chairman of Cambium, intends to remain on the company’s board.

Education has been a hot sector for buyouts lately. In late January an investor group led by Douglas Becker, chairman and chief executive officer of Laureate Education Inc., teamed with a consortium including Kohlberg Kravis Roberts & Co. to take the Baltimore education company private in a deal worth $3.8 billion.

Credit Suisse ran the auction of Cambium and, alongside Barclays Bank PLC, co-led the bank financing for the deal, providing senior and mezzanine debt. Veronis Suhler used Lowenstein Sandler PC as its legal counsel and KPMG for financial advice. The LBO shop has invested in 49 platform companies to date, which have in turn completed over 220 add-on acquisitions.—E.B.