Acquisitions and Divestitures

Acquisitions

During the nine months ended September 30, 2014, we completed the following acquisitions:

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In July of 2014, we acquired Eclipse Energy Group AS and its operating subsidiaries (“Eclipse”) that was integrated into our C&C segment. Eclipse provides a comprehensive suite of data and analytics products on the European natural gas and liquefied natural gas markets as well as a range of advisory services leveraging Eclipse’s knowledge base, data capabilities, and modeling suite of products. This transaction complements our North American natural gas capabilities we obtained from our Bentek Energy LLC acquisition in 2011. We accounted for the acquisition of Eclipse using the purchase method of accounting. The acquisition of Eclipse is not material to our consolidated financial statements.

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In March of 2014, we acquired the intellectual property of a family of Broad Market Indices (“BMI”) from Citigroup Global Markets Inc., that was integrated into our S&P DJ Indices segment. The BMI provides a broad measure of the global equities markets which includes approximately 11,000 companies in more than 52 countries covering both developed and emerging markets. We accounted for the acquisition of the intellectual property on a cost basis and it was not material to our consolidated financial statements.

In June of 2013 we made a voluntary open offer to purchase up to an additional 22.23% of the total equity shares outstanding in CRISIL Limited ("CRISIL"), our majority owned Indian credit rating agency within our S&P Ratings segment. In August of 2013, at the conclusion of the tender offer period, we acquired approximately 11 million equity shares representing 15.07% of CRISIL's total outstanding equity shares for $214 million, increasing our ownership percentage in CRISIL to 67.84% from 52.77%.

As part of CRISIL's acquisition of Coalition Development Ltd. that occurred in July 2012, we made contingent purchase price payments in the first nine months of 2014 and 2013 for $11 million and $12 million, respectively. This has been reflected in the consolidated statement of cash flows as a financing activity.

Divestitures - Continuing Operations

During the nine months ended September 30, 2014, we completed the following dispositions that resulted in a pre-tax loss of $9 million, which was included in other (income) loss in the consolidated statement of income:

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On July 2, 2014, we entered into an aircraft purchase agreement with Harold W. McGraw III, Chairman of the Company's Board of Directors and former President and CEO of the Company. On July 31, 2014, we completed the sale of the Company's aircraft for a purchase price of $20 million. During the three months ended June 30, 2014, we recorded a non-cash impairment charge of $6 million within other (income) loss in our consolidated statement of income as a result of the pending sale. See Note 13 — Related Party Transactions for further information.

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On June 30, 2014, we completed the sale of our data center to Quality Technology Services, LLC which owns, operates, and manages data centers. Net proceeds from the sale of $58 million were received in July of 2014. The sale includes all of the facilities and equipment on the south campus of our East Windsor, New Jersey location, inclusive of the rights and obligations associated with an adjoining solar power field. The sale resulted in an expense of $3 million recorded within other (income) loss in our consolidated statement of income, which is in addition to the non-cash impairment charge we recorded in the fourth quarter of 2013.

During the nine months ended September 30, 2013, we completed the following dispositions that resulted in a net pre-tax gain of $24 million, which was included in other (income) loss in the consolidated statement of income:


•	On September 30, 2013, we completed the sale of Financial Communications, which was part of our S&P Capital IQ segment.


•	On August 27, 2013, CRISIL sold its 49% interest in India Index Services & Products Ltd. This investment was held within our S&P Ratings segment.


•	On August 1, 2013, we completed the sale of Aviation Week within our C&C segment to Penton, a privately held business information company.

Discontinued Operations

On September 22, 2014, we announced a definitive agreement to sell McGraw Hill Construction, which has historically been part of our C&C segment, to Symphony Technology Group, a strategic private equity firm based in Palo Alto, California for $320 million in cash. We expect this transaction will close in the fourth quarter of 2014 following the receipt of regulatory approvals and completion of customary closing conditions. Accordingly, the results of operations for all periods presented have been reclassified to reflect the business as a discontinued operation and the assets and liabilities of the business have been reclassified as held for sale for the periods presented. This agreement followed our announcement on March 18, 2014 that we were completing our portfolio rationalization with the evaluation of strategic alternatives for McGraw Hill Construction.

On March 22, 2013, we completed the sale of McGraw-Hill Education ("MHE") to investment funds affiliated with Apollo Global Management, LLC for a purchase price of $2.4 billion in cash. We recorded an after-tax gain on the sale of $592 million for the nine months ended September 30, 2013, which is included in discontinued operations, net in the consolidated statement of income. During the three months ended September 30, 2013, we adjusted the after tax gain on the sale of MHE, primarily due to post-closing working capital adjustments. For the year ended December 31, 2013, we recorded an after-tax gain on the sale of $589 million. We have used a portion of the after-tax proceeds from the sale to pay down short-term debt, for the special dividend paid in 2012, and to continue share repurchases. We intend to continue to use a portion of the after-tax proceeds to make selective acquisitions and support general corporate purposes.

The key components of income from discontinued operations for the periods ended September 30, 2014 and 2013 consist of the following:



(in millions)	Three Months					Nine Months
	2014		2013			2014		2013
Revenue	$	40	$	43		$	124	$	397
Expenses	37		30			100		406
Operating income (loss)	3		13			24		(9		)
Interest expense, net	—		1			—		2
Income (loss) before taxes on income (loss)	3		12			24		(11		)
Provision (benefit) for taxes on income (loss)	1		5			9		(5		)
Income (loss) from discontinued operations, net of tax	2		7			15		(6		)
Pre-tax (loss) gain on sale from discontinued operations	—		(32		)	—		888
(Benefit) provision for taxes on income	—		(12		)	—		296
(Gain) loss on sale of discontinued operations, net of tax	—		(20		)	—		592
Discontinued operations, net	2		(13		)	15		586
Less: net loss attributable to noncontrolling interests	—		—			—		1
Income (loss) from discontinued operations attributable to McGraw Hill Financial, Inc. common shareholders	$	2	$	(13	)	$	15	$	587

The components of assets and liabilities held for sale related to McGraw Hill Construction in the consolidated balance sheets consist of the following:



(in millions)	September 30, 2014		December 31, 2013
Accounts receivable, net	$	22	$	30
Goodwill	3		3
Other assets	2		3
Assets held for sale	$	27	$	36

Accounts payable and accrued expenses	$	9	$	13
Unearned revenue	34		41
Liabilities held for sale	$	43	$	54