Riverdeep Agrees to Buy Some Assets of Learning Co.
Irish education software company Riverdeep Group agreed Thursday to buy the educational assets of Learning Co., whose brands include Reader Rabbit, Carmen Sandiego and the Mavis Beacon typing series, for $40 million in stock.
Riverdeep also will assume $20 million in debt with the purchase from Los Angeles-based Gores Technology Group, a closely held buyout firm.
Gores acquired Learning Co. about a year ago for almost nothing from Mattel Inc., which paid $3.8 billion for the company in 1998.
“It’s a good deal for Riverdeep because it gives them some great brands, some good distribution at what I think is a pretty attractive price,” said Brandon Dobell, a senior analyst at Credit Suisse First Boston. “For the guys that sold the business, they’re a company that has looked to take a bad asset, fix it up and sell it for more than they paid for it.”
Riverdeep, which designs its programs to meet state curriculum standards, will add 170 employees and double its sales to $70 million with the purchase. The company has joint headquarters in Dublin, Ireland, and Cambridge, Mass.
Gores will retain Learning Co.’s e-commerce and productivity division, which will operate under Broderbund, Learning Co.’s previous name, Bloomberg News said. About 400 former Learning Co. employees will remain at Broderbund, Riverdeep said.
Novato, Calif.-based Learning Co. emerged from the mergers of Broderbund Software, Learning Co. and SoftKey International. It gobbled up more than 60 companies before being acquired by Mattel, which gave Learning Co. to Gores in exchange for the right to a portion of any future earnings or profit from a sale.
“We’re not acquiring the full asset base of what caused the problems for Mattel,” Riverdeep Chief Executive Barry O’Callaghan said. “We’re cherry picking very specific assets.”
O’Callaghan said Gores did a “great job” of turning around Learning Co. after acquiring it from Mattel.
Riverdeep’s American depositary receipts fell $1.22 to $21.03 on Nasdaq.
