A textbook case: Publisher sues Houghton Mifflin Harcourt after deal


A rule of thumb for companies preparing to strike a deal: if you're going to do business together, it's probably not such a great idea to undermine your new colleagues before they've handed you a pot of cash from them. But a $20 million breach-of-contract suit filed yesterday by Cengage, the textbook company formerly known as Thomson Learning, complains of some dirty pool by publisher Houghton Mifflin Harcourt, which unloaded its college textbook division to Cengage last year for $750 million in cash.

Cengage's 14-page complaint charges that, prior to the closing on May 30, 2008, HMH "dramatically increased sales of its college textbooks in an unprecedented manner (particularly in India, South Korea and Taiwan)," with full knowledge that the "unprecedented" sales spike that inevitably followed suit would flood the American market through "unauthorized distribution channels." Meaning that HMH would make a killing on export sales -- and deprive Cengage of post-deal revenues.