Scholastic Will Sell Its Entire Education Technology Business

Costumed fans hold their copies of the book at the Harry Potter and the Deathly Hallows book release party at the Scholastic Book publishers headquarters in New York.

Clark Jones / AP

Scholastic Inc., the publisher of children's books including the Harry Potter series, is taking itself out of the education technology game. The company said today it plans to sell its entire ed-tech business to the publishing giant Houghton Mifflin Harcourt for $575 million.

Both companies' stock fell on the news of the sale. Houghton Mifflin fell by 7.5%, to $24.50, and Scholastic fell 11.5%, to $39.

Scholastic's move to get out of ed-tech is an unusual one in an era where most education companies are scrambling to beef up their technology capabilities and pushing all-digital content on sometimes-wary schools. Houghton Mifflin Harcourt and its two main competitors, Pearson and McGraw-Hill, have all made ed-tech central to their businesses.

Scholastic, however, said it wanted to refocus on its core book business, which includes publishing classic children's titles like Harry Potter, the Golden Compass, and Clifford the Big Red Dog. Scholastic titles are sold in stores, used in classrooms, and through the company's much-beloved book fairs, are a longtime institution of American schools. The company also prints more traditional educational materials.

Scholastic's CEO, Richard Robinson, said in a statement that the company saw growth potential in a "renewed focus on books and reading in schools and at home." The ed-tech division, he said, had a "substantially different model for product development" that did not fit with print publishing and distribution.

The ed-tech division has some 800 employees, who will move to Houghton Mifflin, and revenues of $250 million in 2014. Its central product is a brand of computer-based software focused on remedial education for middle-grade students, called Read 180 and Math 180.