Better Capital, the turnaround private equity firm established by Jon Moulton, has bought the UK subsidiary of the Reader’s Digest magazine.
Better Capital, the turnaround private equity firm established by Jon Moulton, has bought the UK subsidiary of the Reader’s Digest magazine.
Following the transaction the new company will have no bank debt. Better Capital says it anticipates committing a total of £13 million to finance the transaction and fund future growth, injected in a combination of equity and loan stock yet to be finalised.
Sean Cooper, a member of Better Capital, will join the board of the acquisition vehicle. The investment backs the Reader’s Digest UK management team, who will take 35 per cent of the equity in the new company.
The assets acquired had a book value of £7 million at 31 March 2010. Unaudited net revenues for the year to 30 June 2008 were £85 million, with an operating loss (pre-exceptional items) of £1 million.
Reader’s Digest UK is a direct marketing business selling books, music CDs, DVDs and other products to its customer base of over 600,000 individuals. It also publishes a monthly magazine which is sent to nearly half a million subscribers and regularly operates prize draws for large sums of money.
Although profitable historically, Reader’s Digest UK faced a number of issues, including the funding of its defined benefit pension scheme and as a result the directors filed for administration earlier this year.
Better Capital sealed its first deal in February when it acquired aerospace components supplier Gardner for £20 million.
