Reader's Digest Acquires Books Are Fun

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The Reader's Digest Association, Pleasantville, NY, yesterday announced its agreement to acquire Books Are Fun, a display marketer of books and gifts, for approximately $380 million in a cash and debt transaction.


In a Webcast with Wall St. analysts, Thomas O. Ryder, the company's chairman/CEO, said the acquisition would reduce the company's reliance on sweepstakes by giving it new distribution channels. "While the direct marketing channel continues to be productive, we need to employ more distribution channels," he said.


Books Are Fun, a privately held company based in Fairfield, IA, sells discounted books through book and gifts fairs at approximately 60,000 schools, 32,000 corporations, institutions and small businesses, and about 9,000 daycare centers. The books are targeted primarily to adults; the product mix includes bestsellers, reference books, nonfiction books as well as non book-related gift items.


There are significant synergies with RDA's gift catalog, Good Catalog, which it acquired nine months ago. "I'd be real disappointed if we couldn't find some synergy there," said Ryder.


In addition to having significant immediate impact on revenues and operating cash flow and earnings per share in fiscal year 2000, Ryder mentioned the biggest area of growth for Books Are Fun going forward lies in the international marketplace.
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