Riverdeep accepts MBO

20 Jan 2003

Irish e-learning company, Riverdeep has accepted a management buyout offer (MBO) at US$1.51 per share with the company valued at US$376.3m (€353.1m).

News of the acceptance sent share prices in the company soaring by 17pc on the Irish stock exchange (ISEQ) this morning.

Hertal, the acquisition vehicle which was set up to acquire Riverdeep and which is controlled by the company’s chief executive and 5pc shareholder Barry O’Callaghan and Patrick McDonagh (who owns 21pc) made the offer, with the backing of UK investment group, Alchemy partners.

If another rival offer is made before the end of the month, at a value of more than US$1.67 per share, Hertal said they would accept the new offer.

It has been speculated that if the bid, which has been floated for some time, failed to achieve the necessary support, O’Callaghan would leave the educational software publisher, of which he is also chairman.

Spokesman for O’Callaghan, Niall McFadden told siliconrepublic.com that he (O’Callaghan) believes that US$1.51 is the highest price he can pay, but if a higher offer does come along he would be more than happy to work for any other company that buys it.

“He had three choices, let the share price collapse, find a new home for the company or buy it himself. The two latter options were obviously the more desirable choices,” continued McFadden.

The offer represents a premium of around 31pc more than the average closing share price of Riverdeep in the month before the announcement of the initial approach and is 24pc over the closing prices of the share on Friday last.

After the initial approach was made in November shares in the company soared 122pc.

If Riverdeeps’s MBO is successful the company will cease to be listed on both the ISEQ and the fledgling tech exchange, ITEQ.

In recent years a number of high profile firms have left the market including Eircom posing a serious challenge for the Exchange.

By Suzanne Byrne