Houghton Mifflin bought by Irish firm
HM Rivergroup PLC, a newly formed Irish company, will pay about $3.4 billion to acquire Houghton Mifflin from Thomas H. Lee Partners and Bain Capital, both of Boston, and the Blackstone Group of New York and London. The three firms snapped up Houghton Mifflin, which traces its roots in Boston to 1832, for $1.66 billion about four years ago from Vivendi Universal, a French media firm.
The purchase price consists of $1.75 billion in cash, and the assumption of $1.6 billion in debt. The new company, HM Rivergroup, now consists of Riverdeep, an Irish software publisher, and Houghton Mifflin.
The creation of the new company by Riverdeep's controlling shareholder, Barry O'Callaghan, essentially allowed the smaller software publisher, with annual revenues of about $330 million, to swallow the much bigger Houghton Mifflin, which reported revenues of $1.28 billion in 2005. Dow Jones, citing an unnamed source, said the deal will be financed mostly by debt with Citigroup Inc., Goldman Sachs and Credit Suisse First Boston providing debt of around $3.1 billion.
When the deal closes, expected before the end of the year, the new company will change its name to Houghton Mifflin Riverdeep Group PLC.
Barry O'Callaghan, chairman and chief executive of Riverdeep, will retain both posts in the merged entity; Houghton Mifflin CEO Tony Lucki will be his No. 2, as president of the merged entity, Dow Jones reported.
Houghton Mifflin has published authors such as Henry David Thoreau and currently publishes writers such as Philip Roth, but earns most of its money from school publishing operations, which account for about 70 percent of revenues.
Riverdeep was founded in 1995, and publishes Reader Rabbit and Cluefinders software. The combination of Riverdeep and Houghton Mifflin would create a rival to other educational publishers including Pearson, McGraw Hill, Canadian publisher Thomson and the Harcourt division of Reed Elsevier.
(By Robert Gavin, Globe staff, and wire reports)
