Publisher Reader's Digest Agrees to Be Acquired
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
November 16, 2006 9:18 a.m.
Reader's Digest Association Inc. agreed to be acquired by an investor group led by Ripplewood Holdings LLC in a transaction valued at about $1.6 billion, plus the assumption of debt.
Under the terms of the deal, the investor group will acquire all of the outstanding common shares of Reader's Digest for $17 a share, or $1.61 billion based on the 95 million shares outstanding as of Sept. 30. Including the assumption of debt, the companies put the value of the deal at $2.4 billion.
Private-equity firms, which purchase businesses with an eye toward improving and selling them for a profit, are on an unprecedented binge, buying up bigger and bigger companies. Their interest in media companies comes as the firms become ever more powerful players in many American businesses.
Reader's Digest, of Pleasantville, N.Y., creates content for magazines, books, recorded music collections, home videos and Web sites. The various editions of Reader's Digest magazine have a monthly circulation of about 18 million and a global readership of about 80 million, the company said. Reader's Digest also publishes Every Day With Rachael Ray. The company had revenue of $2.4 billion for the fiscal year ended June 30, 2006.
The company's chief executive, Eric Schrier, called the deal "a great opportunity," adding, "I look forward to working with Ripplewood in continuing to drive the growth of this great company."
CONSOLIDATION RACE
Private Equity May Face Snags in Media Hunt
10/27/06
Ripplewood's other publishing and direct marketing investments include Direct Holdings Worldwide, a direct marketer of entertainment products under the Time Life brand, and WRC Media, a publisher of educational materials including Weekly Reader and the World Almanac.
"We are very excited to reach this agreement to acquire Reader's Digest, a truly wonderful company with a broad array of global assets and growth businesses that are extending a rich heritage," said Ripplewood CEO Timothy C. Collins in a prepared statement.
Reader's Digest said its board has approved the merger agreement and recommended to the holders of common stock that they adopt the merger agreement. The transaction is expected to close during the first quarter of calendar year 2007, and is subject to the funding of the investor group's committed financing and the approval of the holders of a majority of the outstanding shares of RDA common stock, as well as other customary closing conditions, including antitrust clearance.
Goldman, Sachs & Co. and Michael R. Lynch served as financial advisers, and Jones Day and Richards Layton & Finger P.A. served as legal advisers, to Reader's Digest in connection with its review of strategic alternatives and with the deal.
Morgan Stanley & Co., J.P. Morgan Securities Inc., Citigroup and Merrill Lynch served as financial advisers, and Cravath, Swaine & Moore LLP served as legal adviser to the investor group. |
