O'Callaghan snaps up Harcourt for $4bn
His second mega-deal picks upleading US educational provider
Barry O'Callaghan (38) has been behind two of the three largest deals in Irish corporate history
Tuesday July 17 2007
IRISH software entrepreneur Barry O'Callaghan has pulled off his second mega-deal in less than a year, with his Houghton Mifflin Riverdeep set to buy the US education provider Harcourt for $4bn (€2.9bn).
The deal to buy Harcourt from Anglo-Dutch publisher Reed Elsevier is comprised of €3.7bn in cash and €300m of stock in HM Riverdeep. Harcourt will be combined with the Houghton Mifflin business.
Davy Stockbroker's private clients are being lined up to pump $235m (€170.5m) into the transaction, with Credit Suisse, Lehman Brothers and Citi providing debt financing. The deal puts O'Callaghan, 38, behind two of the four largest deals in Irish corporate history.
It ranks behind the $4.95bn merger of the Corkman's e-learning group Riverdeep with US education publisher Houghton Mifflin (HM) last year and Vodafone's €4.5bn acquisition of Eircell in 2000. Davy clients injected $190m into the HM Riverdeep merger.
Both trail the €6bn merger to form paper packaging giant Smurfit Kappa in late 2005.
"The addition of the Harcourt businesses to Houghton Mifflin will strengthen our position in the highly competitive educational publishing business," said O'Callaghan.
"The combination will broaden and deepen the geographic reach of our combined sales force and enable us to develop the most innovative, updated and customer-focused technology and educational programmes and products to meet the evolving needs of customers, educators and students throughout the (US)."
The stock component of the deal will leave Reed Elsevier with a 11.8pc stake in HM Riverdeep.
The transaction is expected to close in late 2007 or early 2008 after regulatory reviews are completed. If approved, the US market will be dominated by three main publishers: Pearson, McGraw-Hill and Houghton Mifflin.
Riverdeep was founded by Pat McDonagh in 1995. Four years later he brought O'Callaghan, a corporate financier at Credit Suisse First Boston, in as the group's chief executive as it was prepared for flotation.
The group listed on the Nasdaq in March 2000, just days before the technology-laden market reached its all-time peak - giving Riverdeep an initial valuation of $2bn.
O'Callaghan was in a €349m venture capital-backed deal to take the group private in 2002. The entrepreneur recently got the backing of shareholders to move HM Riverdeep's corporate home to the Cayman Islands.
Ahead of the Harcourt deal, O'Callaghan owned 47pc of HM Riverdeep.
- Joe Brennan
