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Investment co. buys Lillian Vernon

Specialty catalog and on-line retailer Lillian Vernon is being acquired by Ripplewood Holdings LLC, an investment management firm in New York, for $7.25 per share in cash. It's come a long way from its inception 52 years ago on its founder's kitchen table.

Ripplewood's industrial partner, ZelnickMedia, New York, will be responsible for the day-to-day operations. The sale represents a 73 percent premium over the $4.20 closing market price of the company's stock on Tuesday, April 15.

Lillian Vernon has been in turnaround mode for the past several years, trying to reinvigorate the business, which has had several suitors. The company also had layoffs two years ago, letting 12 percent of its work force go and closing a call center. The company had $260 million in sales for fiscal 2002.

Following the acquisition, Lillian Vernon, founder, current chairman and the largest stockholder, will continue to serve as the company's non-executive chairman and its spokesperson. She will no longer run the day-to-day operations of the company, and will own five percent of the acquired company after the merger.

Ripplewood manages approximately $4 billion of committed capital through four institutional private equity funds, focusing primarily on investments in the U.S. and Japan.

"I'm delighted to announce the proposed merger. We believe that the $7.25 per share cash offer provides an attractive price for our shareholders. I am very pleased to be able to find a group that understands our customers and is interested in taking the company to the next level," Vernon said. "I am looking forward to my continued involvement in those parts of the company to which I can contribute and which I truly enjoy."

Strauss Zelnick, founder, ZelnickMedia, will become chairman of the new company. ZelnickMedia is a partnership of high-profile media executives that owns interests in an array of enterprises in recorded music, publishing, CD manufacturing, online games, and media-related software, in both the U.S. and Asia.

Zelnick said: "We have enormous respect for Ms. Vernon as an entrepreneur, merchandiser, and direct marketing pioneer. The Lillian Vernon catalog has for decades been a nationally recognized leader of the gifts category. We look forward to working with Ms. Vernon and her team to take advantage of new opportunities in licensing, on television, and in other media, as well as increase the company's already sizable online presence. We are very excited about the opportunity to build upon the foundation of this terrific brand."

Lillian Vernon and its subsidiaries publish seven catalogs: Lillian Vernon, Lilly's Kids, Christmas Memories, Favorites, Personalized Gifts, Sales and Bargains, and Rue de France.

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