LONDON-Barry O'Callaghan's acquisition of Reed Elsevier's education assets for $4 billion will catapult the Irish executive deeper into the front line of educational publishing in the United States.
O'Callaghan heads HM Riverdeep, a Dublin-based educational software publisher. On Monday, O'Callaghan's Boston-based Houghton Mifflin Riverdeep said it was buying Reed's U.S. educational publishing arm to create a U.S. textbook giant.
O'Callaghan has now been involved in two of the four largest deals in Irish corporate history inside of eight months.
"He's one of the more imaginative and daring executives," Scott Sperling, co-president of private equity firm Thomas H. Lee Partners, told Reuters.
Houghton Mifflin was owned by private equity firms Bain Capital, Thomas H. Lee Partners and The Blackstone Group before O'Callaghan's Riverdeep acquired the business in November 2006 for $3.4 billion including debt.
O'Callaghan is betting big on education publishing at a time when other big-name businesses such as Reed, Thomson Corp. and Dutch publisher Wolters Kluwer NV have exited.
"He clearly had a vision when he approached us about buying Houghton Mifflin," said Sperling.
"It was a minnow swallowing a whale, but he was able to execute and make it work. That deal had a lot to do with his own personal tenacity, quite frankly."
In this year's rankings of the richest people in Ireland by the Sunday Times newspaper, O'Callaghan came 48th with his 46 percent stake in Dublin-based Riverdeep, which the paper said was worth more than 179 million pounds ($364.9 million).
O'Callaghan declined to be interviewed for this story.
Reaching for the Top
Assuming the Harcourt deal is approved by regulators, the transaction would put Houghton alongside Pearson and McGraw-Hill Cos. Inc. as the world's leading publishers.
Goldman Sachs said in a research note that Houghton-Harcourt's pro forma market share in the U.S. publishing market covering kindergarten to the last year of high school will jump to nearly 40 percent. This compares with 26 percent for Pearson, the world's largest educational publisher, and 24 percent for McGraw.
"The guy has a natural affinity for financial markets, which has helped him enormously in achieving what he has," said a former colleague of O'Callaghan's who declined to be named.
Founded in 1995 by Patrick McDonagh, Riverdeep is behind popular educational software brands Reader Rabbit, Carmen Sandiego and Cluefinders. Its flagship product is Destination Success, which spans math and reading courses for various ages.
In 1999, McDonagh hired O'Callaghan from Credit Suisse First Boston, where he was looking after technology, media and telecoms in equity capital markets, to head Riverdeep as it prepared for a flotation.
Riverdeep listed on Nasdaq in March 2000 at the height of the high-tech bull market. Two years later O'Callaghan was involved in a venture capital-backed deal to take the group private after the stock price had fallen sharply.
O'Callaghan now owns 46 percent of Riverdeep and will own 38 percent once the Harcourt acquisition is completed. "He is hugely ambitious, very driven and has a fantastic ability to get complicated deals done," said Des Carville, a director of corporate finance with Davy Stockbrokers in Dublin who has worked with O'Callaghan.
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