This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How Reader's Digest Bungled a Buyout

Reader's Digest (RDA - Get Report) is providing Wall Street with an abridged version of how not to do a corporate takeover.

But these useful tips won't be found in a recent copy of the publishing company's pocket-sized magazine. Rather, they are disclosed in a recent regulatory filing chronicling Ripplewood Holding's proposed $1.6 billion buyout of Reader's Digest.

The Pleasantville, N.Y. publisher reveals the private-equity firm twice offered to pay $18.50 a share for the company, almost 9% more than the $17 a share takeover price that Readers Digest's board ultimately agreed to in November.

It appears Reader's Digest's fumbling of the lengthy negotiations with Ripplewood may have cost shareholders up to $150 million in a buyout premium. The lower takeout price also raises questions about the performance of Goldman Sachs (GS - Get Report), the company's investment bank, in trying to auction the company to the highest bidder.

Officials with Reader's Digest and Goldman Sachs could not be reached for comment.

Reader's Digest, in a regulatory filing late Friday, discloses that in March it received an unsolicited proposal from Ripplewood to buy the company for $18.50. At the time, Reader's Digest shares were selling for $14.40. But the company's board rejected the proposal and Ripplewood's request to enter into a period of exclusive negotiations aimed at ending in a leveraged buyout.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
RDA $18.45 3.71%
GS $197.53 0.00%
AAPL $128.95 0.00%
FB $78.99 0.00%
GOOG $537.90 0.00%


DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs