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Becap Fund backs MGO of Reader’s Digest

Better Capital says the Becap Fund has completed its second acquisition by backing the management buyout of the UK business of Reader’s Digest in a transaction valued at GBP13m.

The management team will be led by Reader’s Digest managing director Chris Spratling.

The business employs 100 people and markets magazines, books, music, video, financial services and healthcare products. It also has a prize draw offering.

The deal aims to secure the future of the business, which went into administration in February 2010 as a result of significant UK pension liabilities.

Reader’s Digest Association has agreed to allow the UK operations to publish under the Reader’s Digest brand through a licence agreement.

The investment will be made from Becap in which Better Capital invested GBP142m following its flotation on London’s AIM in December 2009.

Following the transaction the new company will have no bank debt. 

This is the second transaction by Becap following the acquisition of Gardner Group in February 2010.

Spratling says: "We are delighted to have completed the buyout today and in doing so to have secured the future of a tremendously exciting business. We are now fully funded and debt free and can now focus on bringing our customers all the services and products that they have such huge affection for. The iconic magazine and prize draw will continue but it should be remembered that these are just a part of a much larger business. There are tremendous opportunities for our businesses in financial services, books and healthcare and significant plans to expand all aspects of the Reader’s Digest business in the UK."

Mark Aldridge, chief executive of Better Capital, says: "It’s rare to have an opportunity to back a dynamic management team to run a business with the heritage and brand strength of Reader’s Digest. Management envisage no fundamental changes to the much loved offering and believe with greater investment and expansion through the internet to complement the existing magazine, they will reach a wider audience. This is a business that we see going from strength to strength and catering to the needs of a future generation of Reader’s Digest customers."

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