Irish educational software publisher
The deal will see newly created
On completion of the transaction Riverdeep chairman and major shareholder Barry O’Callaghan and the management group will own approximately 50% of HM Rivergroup, other former shareholders of Riverdeep will own approximately 15%, and new investors will own the remaining 35%. Houghton Mifflin management and employees will roll over US$40 m of their existing equity into equity of HM Rivergroup.
Houghton Mifflin was bought by private equity investors Bain Capital and Thomas H Lee and Blackstone Group in a US$1.66bn buyout from Vivendi in November 2002. The French conglomerate had paid US$2.26bn just 17 months before hand at the height of the new media and tech boom.
Smaller rival Riverdeep was founded in Dublin in 1996 by tech entrepreneur Pat McDonagh, who hired then CSFB investment banker Barry O’Callaghan to manage the IPO of the company in 2000, one of a number of high profile NASDAQ flotations of Irish tech firms.
In 2003 O’Callaghan and McDonagh took the business private in a US$361m management buyout (MBO) backed by private equity turnaround specialist Alchemy Partners.
Alchemy took out its original US$88m investment at twice cost a year after investment, following a successful bond issue in a recapitalisation/sale which left management in sole control of Riverdeep.
HM Rivergroup will finance the acquisition of Houghton Mifflin and the required refinancing of Houghton Mifflin’s and Riverdeep’s debt with financing committed by Credit Suisse and Citigroup, as well as with the cash proceeds of common equity subscribed for by certain institutions and individuals including O’Callaghan.
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