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UPDATE 1-Washington Post moves into the healthcare business

(Adds executive statement, background)

Oct 1 (Reuters) - Washington Post Co said it would acquire a majority stake in privately held Celtic Healthcare Inc, branching even further away from its newspaper roots.

The Washington Post is diversifying its revenue base as it flagship paper battles severe declines in advertising revenue and its education division - once a goldmine for the company - faces challenges because of government regulation.

"Our acquisition of Celtic Healthcare is part of the Post Company's ongoing strategy of investing in companies with demonstrated earnings potential and strong management teams," Donald Graham, chairman and CEO of the Washington Post Co, said in a statement.

The terms of the transaction announced on Monday were not disclosed.

Over the past couple of years, the Washington Post's education division, Kaplan, has been embroiled in a controversy along with other for-profit colleges over whether these learning institutions have misused government funds and attract students through deceptive advertising.

Its publishing division has been suffering - print advertising fell 15 percent to $56.7 million in the second quarter.

Meanwhile, Washington Post shareholder and closely watched investor Warren Buffett became the largest stakeholder in the dialysis company DaVita Inc through his company Berkshire Hathaway Inc , a government filing said on Monday.

Based in Mars, Pennsylvania, Celtic Healthcare provides home healthcare and hospice services in the northeastern and mid-Atlantic regions.

Washington Post shares were almost 1 percent at $366.17 in midday trading on the New York Stock Exchange.

(Reporting by Jennifer Saba in New York and Bijoy Koyitty in Bangalore.; Editing by Maju Samuel and Andre Grenon)

((bijoy.koyitty@thomsonreuters.com)(within U.S. +1 646 223 8780)(outside U.S. +91 80 4135 5800)(Reuters Messaging: bijoy.koyitty.reuters.com@reuters.net))

Keywords: WASHINGTONPOST ACQUISITION/

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