Investor group to acquire Reader''s Digest for $1.6 billion

16 Nov 2006

Mumbai: An investor group led by buyout firm Ripplewood Holdings has agreed to buy Reader's Digest Association Inc, publisher of one of the most widely-read US magazines, for $1.6 billion, the two sides said in a statement. Including assumed debt, the deal is worth $2.4 billion.

The deal values Reader's Digest at $17 per share. Ripplewood said the price represents a 23 per cent premium over the average closing price of Reader's Digest shares in the previous 45 trading days.

Ripplewood already has investments in Direct Holdings Worldwide, a direct marketer of entertainment products, and WRC Media, which publishes educational materials. The current deal would add to Ripplewood's investments in media.

The investor group includes J. Rothschild Group, GoldenTree Asset Management, GSO Capital Partners, Merrill Lynch Capital Corporation and Magnetar Capital.

Reader's Digest is best known for its flagship publication, Reader's Digest. The magazine, which is published in 21 languages, has a monthly circulation of about 18 million, and is read by an estimated 80 million people worldwide. The company posted revenue of $2.4 billion in the fiscal year ended June 30.

The private equity group, which will also assume Reader's Digest's debt, said in its filing with regulators that for the quarter ended September 30, the company had long-term debt totalling $776.3 million.

The company said it expects the sale to close in the first quarter of 2007, subject to shareholder approval and other customary conditions. Reader's Digest was advised by Goldman Sachs and Michael R. Lynch. The deal is expected to close in the first quarter of 2007.