Reader's Digest agrees to takeover

The Reader’s Digest Association, the company responsible for publishing some of the world’s best-read magazines, agreed to a $1.6 billion takeover offer yesterday, the latest whitecap atop a growing wave of private media takeovers.

Reader’s Digest, an 84-year-old company that publishes the pint-size magazine; the largest-selling North American food magazine Taste of Home; and the fast-growing Everyday With Rachael Ray, agreed to be acquired for $1.6 billion by investors led by Ripplewood Holdings. The offer is a 43 percent premium over the company’s August stock price, when shares bottomed at $11.83.

The investor group, which includes Merrill Lynch Capital and the J. Rothschild Group, will also assume $800 million in debt, bringing the total purchase to $2.4 billion.

The acquisition comes while other publicly traded media companies weigh private takeovers.

Ripplewood hopes to cut costs at Reader’s Digest and expand sales by marketing to customers who already subscribe to publications sold by Ripplewood’s other media companies. Those titles include the Time Life series, The Weekly Reader and The World Almanac.

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