The Carlyle Group, a District-based investment firm, said yesterday that it will buy Entertainment Publications Inc., the world's largest publisher of coupon books, for $345 million.

Entertainment Publications is a unit of Cendant Corp., a franchising and direct-marketing company based in New York.

Cendant will retain a 16 percent stake that the company values at about $20 million. Entertainment Publishing will retain its current management.

"We really like the business because it combines a number of themes we have been looking for," particularly in the promotional realm, said Frank D. Yeary, managing director at the Carlyle Group. "Promotion money is growing twice as fast as advertising."

Entertainment Publications, based in Troy, Mich., publishes coupons and other printed discount offers from 73,000 merchants representing 275,000 locations, including restaurants, hotels, movie theaters, theme parks, sports events and retailers. Charities and community organizations often sell the coupon books to help raise funds.

With the purchase, the Carlyle Group plans to find a niche for the promotional business on the Internet.

"Promotion is one of the great, not fully organized industries on the Internet," Yeary said. "We have 850 salespeople right now with merchants who give us high promotion offers . . . which we can reuse on the Internet."

Cendant will sell Entertainment Publications as part of its strategy to "sell our non-core assets to repurchase stock," said Cendant spokesman Elliott Bloom. Cendant has sold 11 non-core operations this year and is in the process of selling at least two others.

The sale of Entertainment Publications is expected to generate an after-tax gain of about $140 million for Cendant, Bloom said.

Cendant had to restate its earnings in September 1998 after disclosures of serious accounting irregularities at CUC International Inc., the company that merged with HFS Inc. to create Cendant. The company is in the process of selling off most of CUC's operations.

Cendant plans to focus mainly on the franchising of hotels, car-rental agencies and real estate brokerages and on direct marketing, said company officials.

In the second quarter, Cendant reported earnings of $195 million on revenue of $1.38 billion. Cendant stock fell 87 1/2 cents yesterday to close at $17.56 1/4 on the New York Stock Exchange.