FRANKFURT, July 11 (Reuters) - Bertelsmann [BERT.UL] has agreed to sell its North American book clubs to U.S. private investment company Najafi Companies, the German media conglomerate said on Friday.
The agreement is expected to close in the third quarter of 2008, Bertelsmann said without disclosing financial terms. Media reports have said Bertelsmann was hoping to fetch around 250 million euros ($394.3 million).
Bertelsmann said in March it had launched a sales process for its North American book club unit and said at the time the advising bank was Morgan Stanley (MS.N).
The book clubs offer members books, CDs and DVDs at cut prices via mail order in return for a commitment to make regular purchases. The business has suffered from a significant fall in CD sales and in memberships as well as the weak dollar.
Bertelsmann’s net income plunged more than 80 percent to 405 million euros in 2007, largely on writedowns at the U.S. division of the Direct Group book business. The book club unit generated about 13 percent of Bertelsmann’s sales of 18.8 billion euros.
The media conglomerate had hoped to expand its U.S. book clubs business by purchasing U.S. book club Bookspan last year and Columbia House, a membership-based seller of DVDs and music, in 2005. (Reporting by Nicola Leske)