Alchemy behind Riverdeep buyout

UK private equity firm Alchemy Partners has emerged as the backer of a circa. E350m management buyout at Irish-listed educational software company Riverdeep Group.

The turnaround specialist has teamed up with Barry O’Callaghan and Pat McDonagh, chief executive and company founder of Riverdeep respectively, to make an offer for the company at between E1.40-1.60 per share, valuing the business at between E336m and E384m.

UK newspaper The Times reports that final arrangements are yet to be made for the financing of the deal, although AIB, JP Morgan, Royal Bank of Scotland and Barclays Bank have all agreed to support the proposed buyout, with the latter two likely to lead the financing.

McDonagh and O'Callaghan are expected to combine their shareholdings to provide E90m of the equity for the deal. Alchemy is providing a further E90m with the remainder being provided by the banking consortium.

Confirmation of the deal was not expected until the New Year, but an announcement is now expected before Christmas to respond to shareholder concerns that the offer undervalues the company. In March, the company was trading at E4.23 but last month the company’s price had fallen to E0.75 per share. At the close of trading on Friday, the company’s stock was trading at E1.25.

Last week Irish broker NCB Stockbrokers advised Riverdeep shareholders to reject any bid that fell below the E2.00 mark. NCB had advised Riverdeep to dispose of its consumer businesses, which would raise E100m, and re-focus on its educational operations.