Rapid Technology, a publicly quoted technology firm founded by Irish entrepreneur Mr Pat McDonagh, has made a €15.5 million bid for the Dublin-based e-learning firm Electric Paper.

The deal is conditional on the acceptance of 70 per cent of Rapid's shareholders at an extraordinary general meeting planned for Match 31st and the success of an €8 million share issue by Rapid.

This share issue is being underwritten by Mr McDonagh - the founder of two other quoted Irish technology firms, Riverdeep and SmartForce - who may provide up to €5 million of the funding.

Rapid said yesterday it would issue more than 53 million shares to fund the transaction. Dolmen Butler Briscoe will also try to place shares with new investors.

If the acquisition goes ahead, Rapid plans to rebrand as ThirdForce and transform into an e-learning firm. Until now the firm developed point-of-sales technology for the retail sector with only limited success. It has already agreed to license its screenkey technology to SK Interfaces, a firm founded by former Rapid directors, Mr Cormac Molloy and Mr Mark McDonnell.

Under the terms of the deal, Rapid proposes to pay Electric Paper's shareholders €7.5 million in cash and give them a 41.1 per cent shareholding in the firm.

The deal would net Electric Paper's founders, husband and wife team Hugh and Gilly Skinner, €4.1 million cash. Other beneficiaries include Electric Paper's managing director, Mr Jonny Parkes, who stands to make €1.2 million and the firm's chairman, Mr Denis McMahon, who will make under €1 million.

State agency Enterprise Ireland would net just under €500,000 if the deal goes ahead, and Electric Paper's 86 staff would share just over €500,000.

Rapid's 600 existing shareholders, who have seen the value of their shares fall from more than €4.50 in mid-2000 to just 15 cents, will receive 17.8 per cent of ThirdForce. The new investors who provide the €8 million to support the new share issue will get 41.1 per cent of ThirdForce.

Rapid's chief executive, Mr Brendan O'Sullivan, said yesterday he was confident the planned transaction would go ahead when shareholders looked at the terms. Mr Pat McDonagh owns 26 per cent of Rapid's shares. Former directors of the firm, Mr Jim Barry and Mr Roger Bannon, own 20 per cent. Mr O'Sullivan said he believed Rapid could transform successfully into an e-learning firm and could become a major global player.

He said there had already been interest expressed by a German-based fund in the €8 million share issue by Rapid, however he did not name the fund. ThirdForce would benefit from royalties from its decision to license its Screenkey technology to SK Interfaces, added Mr O'Sullivan.

Rapid generated revenues of just €3.33 million in the year to June 2002. Shares in Rapid added 1 cent yesterday to close at 16 cents following the announcement of the offer. The firm's shares were suspended before Christmas pending the offer and were relisted yesterday.