Cork-born financier Barry O'Callaghan is contributing $40 million towards the $4 billion purchase of Harcourt Education by Education Media & Publishing Group, the e-learning company formerly known as Riverdeep.  Ciarán Hancock, Business Affairs Correspondent, reports

This emerged in a note to clients yesterday by stockbroker Davy.

Harcourt's sale price comprises $3.7 billion in cash and $300 million worth of EMPG shares.

The cash element includes $235 of new equity from existing investors, including Mr O'Callaghan.

The new equity is being placed at $10 a share.

According to Davy's research report on EMPG, the Harcourt deal could provide $300 million in cost savings.

The new entity is expected to generate free cashflow, after interest payments, of $275 million in 2009, representing a yield of 11 per cent.

Davy estimates that the new entity should generate revenues of more than $2.4 billion for full year 2007 and earnings before interest, tax, depreciation and amortisation of $815 million.

Davy's note suggests that EMPG's backers could achieve an internal rate of return of 46 per cent and could potentially double their investment over the next two years.