The decision by Gores Technology to sell its entire 5 per cent shareholding in Riverdeep may have removed one drag on the company's share price.But the surprise move by IBM to sell a third of its stake, at a loss, means the shares are facing a new overhang.
Following the sale, IBM retains 10.2 million shares or around 4 per cent of the company.
Significantly, it did not sign up to the new lock-up agreement entered into by Riverdeep's chief executive Barry O'Callaghan and company founder Pat McDonagh earlier this week.
This leaves it free to sell the remainder of its stake whenever it chooses, provided that it complies with Stock Exchange rules, given its seat on the board.
Until such time as there is greater clarity on IBM's plans for its stake, the shares are going to find it hard to advance.
Aside from the difficult technical position created for the shares, the sale also raises questions about IBM's motivation. Why is the company so keen to exit the stock that it is prepared to incur a loss to do so?
When the computer giant acquired the shares, as part of the Edmark acquisition, they were valued at $18 to $19 (€18-€19).
At last week's placing, they were priced at €2.23 in Dublin, which is the equivalent of around $13.62 per American Depositary Receipt.
This suggests IBM made a loss of around $3.8 million on the sale.
There may have been internal reasons for IBM's decision to place the stock but whatever the reason, it can hardly be considered a vote of confidence in the company.
