NEW YORK (CNN/Money) - Bertelsmann AG, the German media and entertainment giant, announced Tuesday that it has agreed to buy New York-based record club Columbia House.

Terms of the deal were not disclosed.

Bertelsmann will acquire Columbia through BMG Direct, a division of DirectGroup Bertelsmann. Stuart Goldfarb, CEO of BMG Direct, will serve as president and CEO of the newly acquired company.

BMG Direct is the largest direct to consumer retailer of recorded music in the United States while Columbia House is the largest specialized retailer of DVDs.

Investment firm Blackstone Group owns 85 percent of Columbia House. Sony Corp. (Research) and Time Warner (Research) hold a combined 15 percent stake in the company. Time Warner is the parent company of CNN/Money.

"The combined BMG Direct and Columbia House entity will offer a broader selection of products to a larger customer base, while at the same time creating cost efficiencies," Ewald Walgenbach, CEO of DirectGroup Bertelsmann said in a statement.

The acquisition is subject to government approvals, Bertelsmann said.

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