Reader’s Digest Association, which reportedly put itself up for sale this week, has hired investment bankers Evercore Partners and Morgan Stanley to shop the company (or parts of it) to potential buyers, sources told the New York Post’s Keith Kelly. One source said that the company could sell for more than $1 billion, thanks to annual revenue of roughly $1.7 billion and cash flow of around $86 million.
RDA still hasn’t confirmed reports of a sale. According to one insider, the company has considered making an official announcement of its plans but hasn't made a decision yet.
The popular RDA-owned website Allrecipes.com, which some people suggested could be sold as a separate unit, could bring in $400 million alone, assuming it gets a high multiple similar to other digital properties that have been sold recently, says Kelly. The Wall Street Journal, which first reported the potential RDA sale on Monday, estimated a $100 million to $200 million price tag for Allrecipes.com.
Although Reader’s Digest is still the country's largest circulation magazine, published in more than 50 countries worldwide, buyers could be wary of the fact that more than 30 percent of RDA’s revenue comes from print publishing and that much of its other business is tied to direct-mail operations, according to Kelly.