Riverdeep MBO set to receive the all clear

THE Riverdeep management team led by chief executive Barry O’Callaghan is expected to announce today that more than half the company’s independent shareholders have accepted the offer.

Riverdeep said on Friday that eight separate would-be investors had declined to make an alternative offer for the company, making it likely the $376 million (€349 million) management buyout move will now get the all clear.

It’s understood that those interested in the company founded by Dubliner Pat McDonagh included Dermot Desmond, Microsoft, WRC Media and Renaissance Learning, a major competitor of the e-learning software group.

Most of the shareholders who have either sold or agreed to sell their shares to the management buyout vehicle Hertal have said they will opt to take cash rather than the share alternative which is on the table. In a unanimous move Riverdeep’s directors urged shareholders to back the cash offer.

There are currently some 240 million Riverdeep shares in issue, of which Pat McDonagh and Barry O’Callaghan own 25%.

The buyout team need 80% acceptance from the remaining shareholders, or 143 million shares.

It’s believed that by last Friday, Hertal either had written acceptances or other reassurances on 70 million.

The company’s chairman and chief executive, O’Callaghan, and its largest shareholder McDonagh, therefore will have control of around 55% of Riverdeep.

Other major shareholders include publishing group Reed Elsevier, which has around 3.5%.

Reed Elsevier has agreed to stay on as a shareholder in the privatised Riverdeep.

BIAM, Henderson Global Investors, KBC Asset Management and Capital Group also hold shares.

Computer giant IBM, which held 5% of Riverdeep, has sold almost all its shares and that most of the other major shareholders have also given indications that they will sell to the MBO team.

Reports yesterday suggested that the institutional shareholders will all follow the lead of BIAM, the major institutional owner of Riverdeep shares.

The Irish-founded learning software firm holds an EGM on March 4 and will require acceptances from 51% of shareholders to clear the Hertal deal.