When the shareholders of Reader's Digest convene on February 2 to vote on whether to accept a buyout offer from Ripplewood Holdings, they can ponder the nearly 10% discount they will be giving Ripplewood on their shares from the previously offered price. Twice, Ripplewood offered Reader's Digest $18.50 a share to take the company private only to be rebuffed by Reader's Digest's board who felt they could get a better price. After Ripplewood made its second offer - Reader's shares were trading for a mere $13.44 at the time - the company empowered Goldman Sachs to seek other bidders in the hopes of igniting a bidding war which would jack up the buyout price. But that scenario never emerged; by Sept. 22, the stock was down to $12.45 a share and prospects for a buyout were nil. Ripplewood came back with a counteroffer for $16.50, which it claimed was a reflection of the company's falling share price. As the price of the stock recovered, Ripplewood made its final offer of $17 a share - the one which was ultimately accepted. Goldman received $11 million for its services.
• Sources: Press Release, TheStreet.com, The Milwaukee Business Journal
• Related commentary: Reader's Digest Acquisition: Last Minute Severance Changes for Departing Chairman, Blue Harbour Cashes In On Reader's Digest Takeover Bid, Reader's Digest Agrees To $1.6 Billion Buyout, Cramer's Take on RDA
• Potentially impacted stocks and ETFs: Reader's Digest (RDA). Competitors: Scholastic Corporation (SCHL), Meredith Corporation (MDP)
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