Reader’s Digest Association to be Acquired for $2.4 Billion
The Reader’s Digest Association Inc. (RDA) announced yesterday a merger agreement with an investor group headlined by Ripplewood Holdings LLC. The group will acquire all of RDA’s outstanding common shares and assumption of RDA’s debt for a total transaction valued at $2.4 billion.
“After looking closely at our company’s assets and prospects for growth, Ripplewood offered to purchase the company for $17 per share, and our Board of Directors subsequently accepted this offer,” RDA President and CEO Eric Schrier wrote in a candid note to all of his employees.
According to RDA, the Board of Directors has approved the merger agreement, which should take place during the first quarter of 2007, and recommended to common stock holders that they adopt it. The agreement states that RDA’s common shareholders will receive $17.00 per each share of RDA stock they hold, a premium of approximately 25 percent greater than RDA’s volume-weighted average over the last 60 days.
“Obviously, this is a momentous step, but it does not fundamentally change what we are trying to accomplish together. ... And it does not fundamentally change what kind of company we are, or [are] striving to be,” Schrier said. “If this acquisition is completed, it will return RDA to its roots–as a private company. ... You will find much has been written about going private, and of the advantages for some organizations when time-consuming public disclosure and shorter-term, quarter-to-quarter pressures are alleviated,” he said.
RDA was privately held for nearly 70 years until 1990. “I can tell you that [Ripplewood Holdings LLC] is a highly respected equity firm with global scope and depth to its interests,” Schrier said. “With $10 billion in controlled assets, Ripplewood invests in sectors as diverse as automotive, manufacturing, financial services and entertainment. It also owns WRC media which publishes Weekly Reader magazine, The World Almanac and Book of Facts, the Funk & Wagnalls Encyclopedia and The World Almanac for Kids.”