Irish e-learning company SmartForce and its US counterpart, SkillSoft,announced a "definitive agreement" last night to merge in a stock for-stock transaction which they say will create a global leader in corporate e-learning.
Both firms have been struggling with slow sales as business customers have reduced training budgets during the economic slowdown. SmartForce, the world's largest e-learning firm, announced on April 19th that 80 of the 500 jobs at its Irish operations in Dublin would have to go as part of an effort to cut costs in declining markets.
It warned earlier that sales would fall to a third of those previously forecast.
In April several US analysts downgraded their forecasts for SkillSoft, citing market conditions.
Mr Greg Priest, chairman and chief executive of SmartForce, founded in Dublin 18 years ago, will become chairman and chief strategy officer of the merged company. Mr Chuck Moran, president and chief executive of SkillSoft, will serve as president and chief executive officer.
A SmartForce spokesman said last night that Dublin would be the corporate headquarters of the merged operation and would remain the key development centre. On the company hierarchy, he added: "Chuck is the main man."
Following the merger, SmartForce shareholders will own about 58 per cent of the combined firm, and former SkillSoft shareholders will own about 42 per cent. The transaction is being structured as a merger of SkillSoft into a newly formed subsidiary of SmartForce, with SmartForce issuing shares to the former SkillSoft shareholders.
SkillSoft shareholders will receive 2.3674 SmartForce shares for each share of SkillSoft that they own, according to a statement from SmartForce, released after the close of the US markets. SmartForce shareholders are effectively receiving a premium of about 19 per cent based on Friday's closing prices and about a 30 per cent premium to the 30-day trailing average prices of the two firms' shares, the statement said.
The merger will "bring together SmartForce's portfolio of IT, enterprise applications and sales and CRM e-learning solutions with SkillSoft's comprehensive suite of business and professional e-learning solutions, including management, leadership, communication, project management and customer service, the companies said in a statement. "This transaction creates a powerful force in e-learning," said Mr Priest. It would give the combined company an opportunity to "grow revenues and profits and to build upon and enhance our combined position as the leader in e-learning".
The new firm is forecasting for the year ending January 31st, 2003 revenues of up to $99 million (€105 million). For fiscal 2004 the firm is forecasting combined revenue of $255 million.
Recently Mr Priest said of SmartForce: "Our cost base is simply too high for current market realities." At the time,SmartForce said it would cut 421 jobs, or 23 per cent of its global workforce, which now stands at around 1,500. SkillSoft, which has an office in Northern Ireland, employs 314 worldwide. Its market capitalisation of $260 million is close to SmartForce's $300 million.
