Ripplewood to Acquire The Reader's Digest Association, Inc. for $2.4 Billion, or $17.00 Per Share in Cash

Nov 16, 2006, 00:00 ET from Ripplewood Holdings LLC

    NEW YORK, Nov. 16 /PRNewswire/ -- An investor group led by Ripplewood
 Holdings LLC announced today that it has entered into a definitive merger
 agreement to acquire The Reader's Digest Association, Inc. (NYSE:   RDA), a
 global leader in publishing and direct marketing, in a transaction with an
 aggregate value of $2.4 billion. The investor group also includes the J.
 Rothschild Group, GoldenTree Asset Management, GSO Capital Partners,
 Merrill Lynch Capital Corp., and Magnetar Capital.
     Under the terms of the merger agreement, Reader's Digest's shareholders
 will receive $17.00 per share in cash for each common share of Reader's
 Digest they hold, representing a premium of approximately 23% over Reader's
 Digest's average closing share price during the 45 trading days ended
 November 15, 2006. The Board of Directors of Reader's Digest has approved
 the merger agreement and recommended that Reader's Digest's stockholders
 adopt the agreement.
     Reader's Digest is a publisher and direct marketing company that
 creates and delivers products and content for magazines, books, recorded
 music collections, home videos and online websites. Its flagship magazine,
 Reader's Digest magazine, is published in 50 editions and 21 languages with
 a monthly circulation of approximately 18 million and a global readership
 of approximately 80 million. The company reaches millions of consumers
 through more than 20 other magazines and online portals, including Every
 Day with Rachael Ray,, and Taste of Home, America's
 best-selling food and cooking magazine. Reader's Digest's products are
 organized around four key affinities: food, home and garden, health, and
 English as a second language. For the fiscal year ending June 30, 2006, the
 company generated revenue of approximately $2.4 billion.
     Ripplewood Holdings has considerable investment expertise in the
 publishing and direct marketing industries. Portfolio investments include
 Direct Holdings Worldwide, a leading global direct marketer of
 entertainment products under the Time Life brand, and WRC Media, a leading
 publisher of supplementary educational materials for the school, library,
 and home markets. WRC's stable of distinguished brands includes Weekly
 Reader, World Almanac, and CompassLearning.
     Timothy C. Collins, CEO of Ripplewood Holdings, remarked, "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. Together with our portfolio companies,
 Direct Holdings and WRC Media, Reader's Digest will enjoy the benefits of a
 diversified, multi-channel publishing platform."
     Robert L. Berner III, Managing Director at Ripplewood Holdings, added,
 "We look forward to working with the Reader's Digest team to further
 develop and strengthen the company's robust collection of assets, including
 brands, content, affinity groups, and distribution channels."
     Eric Schrier, CEO of Reader's Digest, remarked, "This partnership
 represents a great opportunity for RDA and its shareholders and employees.
 I look forward to working with Ripplewood in continuing to drive the growth
 of this great company."
     Affiliates of JPMorgan, Citigroup, Merrill Lynch and Royal Bank of
 Scotland provided the buyer with committed debt financing, which is subject
 to customary conditions. Morgan Stanley, JPMorgan, Citigroup, and Merrill
 Lynch served as financial advisors to the investor group. Cravath, Swaine &
 Moore LLP served as legal advisor to Ripplewood Holdings.
     The transaction is subject to the approval of the holders of a majority
 of the outstanding shares of Reader's Digest common stock and receipt of
 financing by the investor group, as well as other customary closing
 conditions, including antitrust clearance. The transaction is expected to
 close in the first quarter of calendar 2007.
     About The Reader's Digest Association, Inc.
     With global headquarters in Pleasantville, New York, The Reader's
 Digest Association is a global publisher and direct marketer of products
 that inform, entertain and inspire people of all ages and cultures around
 the world. The company's website is:
     About Ripplewood Holdings LLC
     Based in New York, Ripplewood Holdings is a leading private equity firm
 established in 1995 by Timothy C. Collins. Through five institutional
 private equity funds managed by Ripplewood, the firm has invested over $3
 billion in transactions in the U.S., Asia, Europe and the Middle East.
     Contacts:  Jeffrey Taufield/Todd Fogarty
                Kekst and Company for Ripplewood
                (212) 521-4800
     Forward-Looking Statements
     This press release may contain "forward-looking statements" within the
 meaning of the Private Securities Litigation Reform Act of 1995. Those
 forward-looking statements include all statements other than those made
 solely with respect to historical fact. Numerous risks, uncertainties and
 other factors may cause actual results to differ materially from those
 expressed in any forward-looking statements. These factors include, but are
 not limited to, (1) the occurrence of any event, change or other
 circumstance that could give rise to the termination of the merger
 agreement; (2) the outcome of any legal proceedings that may be instituted
 against The Reader's Digest Association, Inc. and others following the
 announcement of the merger agreement; (3) the inability to complete the
 merger due to the failure to obtain shareholder approval or the failure to
 satisfy other conditions to the merger, including the receipt of
 shareholder approval and the expiration of the waiting period under the
 Hart-Scott-Rodino Antitrust Improvements Act of 1976; (4) the failure to
 obtain the necessary debt financing arrangements set forth in the
 commitment letter received in connection with the merger; (5) risks that
 the proposed transaction disrupts current plans and operations and the
 potential difficulties in employee retention as a result of the merger; and
 (6) other factors described in The Reader's Digest Association, Inc.'s
 filings with the Securities and Exchange Commission, including its reports
 on Forms 10-K, 10-Q and 8-K. Many of the factors that will determine the
 outcome of the subject matter of this press release are beyond Ripplewood
 Holdings LLC's or The Reader's Digest Association, Inc.'s ability to
 control or predict. Ripplewood Holdings LLC and The Reader's Digest
 Association, Inc. undertake no obligation to revise or update any
 forward-looking statements, or to make any other forward-looking
 statements, whether as a result of new information, future results or
 otherwise, except to the extent required by law.
     In connection with the proposed merger, The Reader's Digest
 Association, Inc. will file a proxy statement with the Securities and
 Exchange Commission. Investors and security holders of Reader's Digest are
 advised to read the proxy statement when it becomes available, because it
 will contain important information about the merger and the parties
 thereto. Investors and security holders of Reader's Digest may obtain a
 free copy of the proxy statement (when available) and other documents filed
 by The Reader's Digest Association, Inc. at the Securities and Exchange
 Commission's web site at The proxy statement and such other
 documents may also be obtained for free from The Reader's Digest
 Association, Inc. by directing such request to Richard Clark
     The Reader's Digest Association, Inc. and its directors, executive
 officers and other members of its management and employees and Ripplewood
 Holdings LLC may be deemed to be participants in the solicitation of
 proxies from the stockholders of Reader's Digest in connection with the
 proposed merger. Information concerning the interests of The Reader's
 Digest Association, Inc.'s participants in the solicitation, which may be
 different than those of The Reader's Digest Association, Inc. shareholders
 generally, is set forth in The Reader's Digest Association, Inc.'s proxy
 statements and Annual Reports on Form 10-K, previously filed with the
 Securities and Exchange Commission, and in the proxy statement related to
 the merger when it becomes available.

SOURCE Ripplewood Holdings LLC