After someone else has bought a round, it's your shout. Thus far, Davy Stockbrokers and Credit Suisse have ponied up to cover Barry O'Callaghan's tab. Now he's declared that it's his turn to buy and he's opened up his wallet.
Forty million of his own personal dollars will be invested, to help cover the cost of buying up Harcourt Education. It's a considerable portion of the $4 billion price tag, and it will have to give some reassurance to Davy's clients. Himself is buying in, they've said, and isn't your money safe in such a scheme as this? Would a man kick in that much money unless he planned to get it back later?
By merging with Harcourt, HM Riverdeep is planning to save $300 million on operations. Judging by the number of high-salaried suits that have left the Harcourt side, you'd have to agree that there is some savings to be had. Whether or not $300 million is a reachable goal remains to be seen.
Davy's clients are being told that they could double their money in two years time, what with the whale-like Education Media Publishing Group planning to turn a profit in short order. A yield of 11% by 2009 has been touted, and that's after the annual interest on the loans has been paid.
Mr. O'Callaghan's investment may not be for the long term. He could sell his shares at some point in the future and count up the profit while relaxing on a sunny beach in Spain. For now, however, his dream of an educational materials publisher has to work according to plan, or he'll stand to lose $40 million.