Reader's Digest Agrees to $1.61B Buyout Offer

Magazine publisher Reader's Digest Association Inc. said Thursday it has agreed to be bought for about $1.61 billion in cash by an investment group led by private equity firm Ripplewood Holdings LLC.

Ripplewood offered $17 for each share. Based on the almost 95 million shares the company had outstanding as of Sept. 30, that puts the amount being offered at $1.61 billion. The offer represents a premium of 10 percent over the stock's closing price Wednesday of $15.51.

The private equity group will also assume Reader's Digest's debt. In its filing with regulators for the quarter ended Sept. 30, the company said long-term debt totaled $776.3 million.

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Reader's Digest, publisher of the eponymous general interest magazine, has been spending heavily in an attempt to boost the circulation of the Reader's Digest magazine, as well as the successful launch of the "Everyday with Rachel Ray" magazine and other new offerings.

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 Ripplewood-led investment group includes J. Rothschild Group, GoldenTree Asset Management, GSO Capital Partners, Merrill Lynch Capital Corp. and Magnetar Capital.

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