Disgruntled Irish fund managers may find themselves with little option but to accept the $1.51 per share offer from the management team looking to take educational software group Riverdeep private.
No rival bidder has emerged following the announcement of the offer from Hertal Acquisitions, the bid vehicle behind the move by Riverdeep chairman and chief executive Mr Barry O'Callaghan and founder Mr Pat McDonagh, and the indications from the market are that none is expected imminently.
Yesterday the shares continued to trade in a tight range. Having risen sharply to €1.38 from €1.15 after Mr O'Callaghan's bid emerged, they have traded between €1.38 and €1.39 since.That is just shy of the euro value of the offer which now stands below €1.41 but it is some way off the €1.56 value that would indicate confidence in the tabling of a rival bid.
Mr O'Callaghan and Mr McDonagh have agreed to sell their blocking 25 per cent plus shareholding to anyone prepared to offer $1.67 (€1.56) a share.
The value of the MBO offer has been sliding from its initial €1.42 level, undermined by the weakening dollar.
Analysts say Irish institutions' disposition to the offer is not improving but nor are the prospects for an alternative offer.
Merrion Capital head of research Mr Rory Gillen said: "While the current situation looks unsatisfactory, rejecting the bid is fraught with risk. We conclude that, in the absence of a competing bid [the probability of which looks low\], shareholders may have little choice but to take the cash offer and put the experience down as an unfortunate brush with a company unaccustomed to working to the best interests of all shareholders."
Merrion had earlier set €2.23 as the bid benchmark and Mr Gillen's comment indicates a sharp lowering of expectations for shareholders.
Mr Gillen said it was now clear that estimates for earnings this year before interest, tax, depreciation and amortisation were now 35 per cent below the guidance reiterated by Mr O'Callaghan and his executives before the collapse in the share price late last year.
Irish institutions are understood to hold less than 15 per cent of Riverdeep, with the bulk of that in the hands of Bank of Ireland Asset Management.
British and European institutions are thought to dominate the share register, adding weight to the decision by Taube Hodson Stonex to pledge its 2 per cent holding to the MBO against Hibernian Investment Managers rejection in relation to its 1.3 per cent stake.
