Riverdeep directors okay MBO, posts €3m loss

21 Feb 2003

The directors of e-learning firm Riverdeep have recommended that investors back a management buyout (MBO) offer of €1.51 per share by Hertal Acquisitions, a company controlled by Riverdeep CEO Barry O’Callaghan and founder Patrick McDonagh.

As this was happening, it emerged this morning that Riverdeep has reported a second quarter pre-tax loss of US$3.15m. This compares harshly with a profit of US$5.68m the same time last year.

The US$1.51 a share values Riverdeep at US$376.3m. The offer follows months of drawn out haggling over share prices. Originally, O’Callaghan and McDonagh’s team accepted a competing offer of US$1.67 a share. However, since then Riverdeep has said that no competing offer has emerged and as a result said it will unanimously accept the cash offer from Hertal Acqusitions.

In its recent results, the company said that: “Sales of our products will continue to be affected by the overall economic climate in the US. However, it will seek to expand its product offerings into higher growth categories within the education and consumer productivity markets.”

The company added that the acquisition of Broderbund in August 2002 increased the brand strength of Riverdeep in the US schools market as well as in markets such as home graphics and design.

For the first half to end of December 2002, the company made a pre-tax loss of US$2.04m against a profit of US$5.99m, on sales of US$117.83m against sales a year earlier of US$70.8m.

By John Kennedy