The Wall Street Journal is reporting that The Reader’s Digest Association has put itself up for sale and hopes to fetch around $1bn, “according to people familiar with the matter”. The Reader’s Digest Association has refused to comment. The process may result in the sale or spinoff of some Reader’s Digest properties rather than the sale of the entire company, two of the people told the newspaper.
The Readers Digest has been loss-making sine 2005. In 2007, an investment group led by private-equity firm Ripplewood Holdings bought The Reader’s Digest Association in a deal worth $1.6bn. However, they loaded the company with debt and the company struggled to pay the interest charges. In 2009 The Readers Digest Association filed for bankruptcy. Ripplewood gave up its ownership of the company loosing their initial £600m investment. The creditors, led by JP Morgan took ownership and replaced the $2.2bn of debt with a much more manageable $550m.
During the process, Reader’s Digest UK was placed in administration, because of complications with its pension fund. In 2010 private equity firm Better Capital bought Reader’s Digest UK from administration for £13m.
The Reader’s Digest Association was founded in 1922, by DeWitt Wallace and Lila Bell Wallace. For many years, Reader’s Digest was the best-selling consumer magazine in the United States. In 2009 they were overtaken by Better Homes and Gardens. Global editions of Reader’s Digest reach an additional 40 million people in more than 70 countries, with 50 editions in 21 languages. It has a global circulation of 17 million, making it the largest paid circulation magazine in the world.
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- Better Capital backs management buy-out to acquire Reader’s Digest UK Posted on April 12, 2010