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, Allrecipes.com, 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: www.rda.com.
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
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.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
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 www.sec.gov. 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