Reader's Digest to Acquire Reiman Publications

Posted on March 22, 2002

The Reader's Digest Association, Inc. has reached an agreement to purchase substantially all of the assets of Reiman Publications LLC, a publisher of cooking, gardening, country lifestyle and nostalgia magazines and books in the United States and Canada. Reiman, based near Milwaukee in Greendale, Wisc., is principally owned by Madison Dearborn Partners Inc., a Chicago investment firm, and senior management of Reiman. The purchase price is approximately $760 million in cash.

The transaction is being funded through committed financing provided by J.P. Morgan and Goldman Sachs. Veronis Suhler Stevenson and Goldman Sachs were the financial advisors to Reader's Digest for this transaction, while Reiman and Madison Dearborn Partners were advised by Gruppo Levey and Company and J.P. Morgan. The company expects the deal to close in the fourth quarter of its fiscal year ending June 30, 2002. The acquisition is subject to regulatory approval and other customary conditions, including finalizing financing arrangements.

"This acquisition is a perfect fit with our growth strategy and will also help reinvigorate our core magazine and Books and Home Entertainment businesses by creating synergies and business expansion opportunities," said Thomas O. Ryder, Chairman and CEO of Reader's Digest. "It will help us distribute our products to new customers, through new marketing channels, while providing an alternate platform for new-product development. The acquisition also will advance our effort to further reduce our dependence on sweepstakes promotions."

Reader's Digest expects that the acquisition will expand the customer base and product offerings for its Books and Home Entertainment and magazine businesses by strengthening its portfolio of publishing brands. The two companies publish 20 magazines between them and collectively have U.S. databases with more than 80 million customers for magazines, books and other products. The duplication factor is low. Fifty-nine percent of Reiman's database, or 19 million customers, are not Reader's Digest customers.

Reiman publishes 12 bimonthly magazines with an aggregate circulation of 16 million subscribers. Seven of the magazines are among the top 100 in the United States in circulation. The largest, Taste of Home, is the nation's top-selling food magazine with 4.6 million subscribers. Other Reiman titles include Country, Country Woman, Birds & Blooms, Reminisce, Farm & Ranch Living, Crafting Traditions and Country Discoveries. Reiman also publishes other books and has a mail-order business. Reiman generates most of its income from magazines and books sold through direct mail.

Reiman has a large catalog of content, which may be repurposed for use in Reader's Digest books and sold through channels including retail, catalogs, and Books Are Fun sales events. Reader's Digest intends to enhance Reiman's marketing efforts through cross-promotions, list-selection capabilities and supply-chain management. Reiman's magazines do not carry advertising, but with Reader's Digest's help they may create special advertising vehicles outside of the magazines.

Roy Reiman, who founded his company in 1964, said: "Our company and Reader's Digest have a great deal in common. We both have a strong focus on home and family, and we have an unusually close relationship with our customers. Over time, as our companies grow, I'm sure we will be able to benefit each other significantly."



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