RC2 to buy children's publishing unit

Toy maker RC2 Corp. said Monday it agreed to buy the children's publishing division of privately held Publications International Ltd. for $163 million in cash as part of a plan to diversify its business.

RC2 said the division sells more than 10 million books a year worldwide. Its sales in the fiscal year ended March 31 were about $112 million.

The deal is expected to close in July. RC2 said it expects to save between $8 million to $10 million a year within 24 months of completing the purchase.

RC2 also expects future tax benefits of $2.5 million to $3 million a year. The company expects the deal to increase earnings per share by 15 cents to 20 cents per share in 2008 and by 30 cents to 40 cents per share in 2009.

The company plans to finance the purchase and future working capital with a new syndicated senior secured credit facility for $325 million.