E-LEARNING: Smartforce chief executive, Mr Greg Priest, defended the company's $284 million (€322.4 million) acquisition of Centra yesterday despite a sharp slump in the firm's stock price.

Shares in the e-learning firm fell 20 per cent in early trading yesterday following its acquisition of Centra, a US-based software firm, in an all-share deal. More than 800,000 shares changed hands in the first 15 minutes of Nasdaq trading, not far off Smartforce's average trading for a full day. Smartforce shares recovered slightly to close down $3.45 at $19.30, a drop of 15.6 per cent, with a massive 14.5 million shares traded.

Mr Priest said the biggest reason the firm chose to do an all-share transaction was for tax reasons. He said all-share transactions in the US were tax free while cash deals would leave Centra shareholders liable to tax.

Smartforce's earnings per share would increase by 2003 as a result of the acquisition, which was good value for shareholders, according to Mr Priest. The deal was scheduled to close in the second quarter.

Ms Bernie Lardiner, an analyst with Davy Stockbrokers, said strategically the deal made sense although the price looked high. She said the acquisition price was a 16 per cent premium to Centra's price and represented an enterprise value to sales of 4.2 times 2002.

Smartforce expects the deal to add five US cents to its earnings' guidance of $1 for 2003.

Smartforce is one of the world's largest e-learning firms and will seek to integrate Centra's Web collaboration software into its product portfolio. This should enable Smartforce to offer e-learning content that is created extremely quickly and used for only a short period.