Nov 292006

The FT is reporting that Houghton Mifflin is close to agree a sale to Riverdeep. Extract from the alert:

Houghton Mifflin is close to announcing a deal to be sold to Ireland’s Riverdeep in a deal worth nearly $5bn that will offer a lucrative exit to the private equity backers of the US publishing group.

According to people familiar with the matter, Bain Capital, Thomas H Lee Partners and Blackstone are expected to make about 3.5 times their money from the deal after three years of ownership.

The transaction is structured as a reverse takeover, with Riverdeep, a Dublin-based company, creating a new company to acquire Houghton Mifflin, based in Boston, for a cash consideration of $3.3bn.

The new company will also acquire Riverdeep, which itself was taken private in 2003, using paper at $6 a share. The current proposed deal is being financed by $1.7bn of senior bank debt, $1bn of high-yield debt, $350m of mezzanine debt and $350m of preferred equity. In addition, there is $600m of new equity – $200m of which Barry O’Callaghan, Riverdeep chief executive, is raising through a bank facility pledged to his share in the new business.

… The new company will be based in Ireland to take advantage of 12.5 per cent corporate tax rates and the favourable treatment of royalties earned on Ireland-registered intellectual property sold to subsidiaries in the US and elsewhere. The company estimates this will save about $200m over a five-year period.

Earlier coverage of this includes:

The Book Standard: Reverse Takeover of Houghton Mifflin by Riverdeep
Boston Globe: Deal reported close for Houghton Mifflin

Google News coverage: here

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