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UK subsidiary of Reader's Digest saved

The UK subsidiary of Reader's Digest has been saved with Better Capital, the private equity group run by Jon Moulton, acquiring the operation for £13 million after its collapse earlier this year. The company went into administration in February after failing to agree a deal with the Pensions Regulator to address the £125 million pension fund deficit.

It is believed that more than 100 separate parties approached the administrator about the UK subsidiary of Reader's Digest and a deal has been agreed fairly quickly. The company's pension scheme will remain with the Pensions Protection Fund, which was set up by the UK government to protect employee pension schemes, with Jon Moulton having agreed two separate deals, one to acquire the UK operations and one which will allow the company to use the Reader's Digest name under a licensing deal with the former US parent.

The operation had turnover of £75 million last year and it was purely and simply the pension fund deficit which forced the move into administration. It will be interesting to see how the operation develops in the short to medium term as the existing management team will remain in control after the company emerges from administration, debt free and with no pension fund deficit.

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