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|Reader's Digest to Acquire Reiman Publications|
PLEASANTVILLE, N.Y., Mar 21, 2002 /PRNewswire-FirstCall via COMTEX/ --
Purchase Will Increase U.S. Customer Base, Accelerate Move Away From Sweepstakes,
Revenues of $300+ Million and EBITDA of $70+ Million Publisher of the Nation's
No. 1 Cooking
Magazine and Lifestyle Publications Has Devoted Customers and a Database of
More Than 32 Million
The Reader's Digest Association, Inc. (NYSE: RDA, RDB) today reached a definitive
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
(Photo: http://www.newscom.com/cgi-bin/prnh/20020321/NYTH131 )
Reiman will contribute revenues to Reader's Digest in excess of $300 million
and EBITDA in excess of
$70 million, joining QSP and Books Are Fun as high-margin, high-potential units
that together will
generate about $1 billion in sales. The addition of Reiman will significantly
reduce the contribution of
sweepstakes promotions to total U.S. revenues.
The transaction is being funded through committed financing provided by J.P.
Morgan and Goldman Sachs.
From the first full fiscal year, the company expects the acquisition to be marginally
accretive from a GAAP
EPS standpoint and significantly accretive for cash EPS, after excluding the
non-cash amortization of
intangible assets. The transaction has been structured as an asset purchase,
which will enable Reader's
Digest to achieve significant tax savings over the next 15 years. 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
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
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
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
"For years I have admired the remarkable work of Roy Reiman and his staff.
They have created some of the
best-loved affinity magazines in North America," said Ryder. "Reiman
has a unique franchise, devoted
customers and pre- eminence in the food publishing business. It is a company
that started with a terrific
editorial and publishing concept, and it keeps building successful new product
categories and extensions of
its existing product lines."
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. It has 4.6 million subscribers, more
than Bon Appetit, Gourmet,
Food & Wine and Cooking Light combined. Taste of Home has been developed
into a franchise, leading to
magazine spin-offs such as Quick Cooking and Light & Tasty, as well as cookbooks
and other ancillary
products. Taste of Home traveling cooking schools visit more than 250 cities
each year. This fall, there will
be a Taste of Home exposition in Milwaukee, with plans to expand the consumer
show to other cities in
2003. The company also recently signed an agreement to license cookware.
Other Reiman titles include Country, Country Woman, Birds & Blooms, Reminisce,
Farm & Ranch Living,
Crafting Traditions and Country Discoveries. Reiman publishes other books and
has a mail-order business
and a visitors' center that draws more than 150,000 customers and guests a year.
Its Web site,
www.reimanpub.com, sells a variety of products online. Reiman generates most
of its income from
magazines and books sold through direct mail. It has a proprietary database
of more than 32 million
individuals. The company celebrates traditional American life, appealing to
a broad-based audience with a
focus on food and country lifestyles. Its products are homespun and inviting.
Enthusiastic readers submit
stories, recipes and photos for publication in the magazines.
Ryder said Reiman would bring a new set of assets and skills to help Reader's
Digest grow its core U.S.
business, and eventually introduce Reiman's low-cost, customer-driven model
within Reader's Digest's
Ryder said: "Reiman's database can be used to cross-promote our products.
Their customers have at least
three characteristics that we look for: they are direct-mail buyers, they buy
promotions, and they share similar demographics and values with Reader's Digest
customers -- which
increases the likelihood of success in cross-promotions. Reiman's management
exceptional skills in non-sweepstakes direct marketing, and we believe those
skills are transferable to
Reader's Digest's businesses."
Reiman has a vast 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 will be able to access Reader's Digest's U.S. database of
more than 50 million
customers. 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
with our customers. Over time, as our companies grow, I'm sure we will be able
to benefit each other
Tom Curl, CEO of Reiman, said: "Up to now, our strength has been launching
magazines and offering related products and services in North America. Reader's
Digest is a worldwide
publisher with the experience to help us pursue international expansion. Perhaps
even more importantly, we
see opportunities to work together on publications and other projects, applying
the two companies' editorial
talent and marketing expertise in ways that neither of us could do as well by
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 Reader's Digest Association, Inc. is a global publisher and direct marketer
of products that inform,
enrich, entertain and inspire people of all ages and cultures around the world.
Revenues were $2.5 billion
for the fiscal year ended June 30, 2001. Products include Reader's Digest magazine,
the most widely read
magazine in the world, published in 19 languages, 48 editions and more than
60 countries. Global
headquarters are located at Pleasantville, New York. For information, visit
This release may include "forward-looking statements" within the meaning
of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements inherently involve
risks and uncertainties that
could cause actual future results and occurrences to differ materially from
the forward-looking statements.
Some of these risks and uncertainties include factors relating to the ability
to integrate the acquired
company's business successfully and realize expected synergies, the continued
strength of the acquired
company's relationships with its employees, suppliers and customers, and the
accuracy of the basis for
forecasts relating to the acquired company's business. 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, contain a
discussion of additional factors that could affect future results and occurrences.
Reader's Digest does not
undertake to update any forward-looking statements.
SOURCE Reader's Digest Association, Inc.
CONTACT: Media - William Adler, +1-914-244-7585, firstname.lastname@example.org,
or Investor Relations - Richard Clark, +1-914-244-5425, email@example.com,
both of The Reader's Digest Association, Inc.; Tom Curl of Reiman Publications
LLC, +1-414-423-0100, firstname.lastname@example.org
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