Acquisitions and Divestitures

Acquisitions

During the three months ended March 31, 2013, we did not complete any acquisitions.

During the three months ended March 31, 2012, we completed the acquisition of R² Technologies (“R²”). R² provides advanced risk and scenario-based analytics to traders, portfolio and risk managers for pricing, hedging and capital management across asset classes. R² was integrated into our S&P Capital IQ segment. Including the pro forma impact on earnings, the acquisition of R² was not material to our consolidated financial statements.

Divestitures

On November 26, 2012, we entered into a definitive agreement to sell MHE to investment funds affiliated with Apollo Global Management, LLC and on March 22, 2013, we completed the sale for a purchase price of $2.4 billion in cash. We recorded an after-tax gain on the sale of $612 million, which is included in discontinued operations, net in the consolidated statement of income for the three months ended March 31, 2013. We are using a portion of the after-tax proceeds from the sale to pay down short-term debt, in part driven by the special dividend paid in 2012, to resume share repurchases and to make selective acquisitions.

In connection with the sale, we have entered into transition service agreements designed to ensure and facilitate the orderly transfer of MHE's business operations to the buyer. Under the terms of these agreements, we will provide various services to MHE for an expected period of three to twelve months from the date of the sale.

The completion of the sale also marks the completion of our Growth and Value Plan that we began in September of 2011. Costs incurred during the three months ended March 31, 2013 and 2012 have been $44 million and $33 million, respectively. All costs for the three months ended March 31, 2013 are recorded in continuing operations, whereas $29 million of the costs for the three months ended March 31, 2012 are recorded in continuing operations. Specifically, for the three months ended March 31, 2013, the costs primarily related to $21 million of professional fees and $19 million of charges associated with our outsourcing initiatives, mainly for the write-down of certain fixed assets. For the three months ended March 31, 2012, the costs primarily related to professional fees and an $8 million charge reducing our lease commitments.

Total costs incurred since the Growth and Value Plan was announced in September of 2011 have been $341 million, of which $280 million have been recorded in continuing operations and $61 million have been recorded in discontinued operations. Costs that have been recorded in continuing operations have been included in selling and general expenses in our consolidated statements of income. These are costs that have been necessary to enable separation, reduce our cost structure, accelerate growth and increase shareholder value.

The key components of income (loss) from discontinued operations for the three months ended March 31 consist of the following:



(in millions)	2013			2012
Revenue	$	268		$	295
Expenses	314			357
Operating loss	(46		)	(62		)
Interest expense (income), net	1			(1		)
Loss before taxes on loss	(47		)	(61		)
Benefit for taxes on loss	(16		)	(25		)
Loss from discontinued operations, net of tax	(31		)	(36		)
Pre-tax gain on sale from discontinued operations	920			—
Provision for taxes on income	308			—
Gain on sale of discontinued operations, net of tax	612			—
Discontinued operations, net	581			(36		)
Less: net loss attributable to noncontrolling interests	1			1
Income (loss) from discontinued operations attributable to The McGraw-Hill Companies, Inc. common shareholders	$	582		$	(35	)

The components of assets and liabilities classified as held for sale in the consolidated balance sheet consist of the following:



(in millions)	December 31, 2012
Accounts receivable, net	$	333
Property and equipment, net	122
Goodwill	469
Other intangible assets, net	156
Inventories, net	235
Prepublication costs	304
Other assets	321
Assets held for sale	$	1,940

Accounts payable and accrued expenses	$	123
Unearned revenue	192
Other liabilities	349
Liabilities held for sale	$	664

We did not complete any divestitures during the three months ended March 31, 2012.