Riverdeep plans reverse takeover of large US firm

23 Oct 2006

Riverdeep, the educational software company, is reported to be close to buying a much larger company, the US publishing firm Houghton Mifflin.

According to reports at the weekend, the deal is expected to be finalised within a matter of weeks. The scale of the proposed deal, which is described as a reverse takeover of Houghton Mifflin by Riverdeep, would make it one of the largest ever involving an Irish company.

If successful, the deal would create a leader in the educational software publishing business worldwide, with an estimated value of about US$4.5bn. This is based on Riverdeep being worth around US$1bn and Houghton Mifflin being worth considerably more, at around US$3.5bn. The deal will be financed through a mix of equity and debt.

Riverdeep has its headquarters in Dublin and Barry O’Callaghan, the technology entrepreneur, holds the roles of chairman and CEO as well as being the controlling shareholder with 60pc of the company.

Houghton Mifflin is owned by a consortium that includes the private equity firms Thomas H Lee, Bain Capital and Blackstone. The US company had sales of US$1.28bn last year compared to Riverdeep’s sales of US$330m. Houghton Mifflin’s current chief executive Tony Lucki is familiar with Riverdeep, having served as a director some years ago when his company Harcourt invested in the Irish firm.

By Gordon Smith