The world’s leading consumer publisher has been formed via the merger of Penguin and Random House. Respective owners Pearson and Bertelsmann announced the merger of the groups last October and today confirm the deal is done. Bertelsmann will own 53% and Pearson 47% of the new company, Penguin Random House. The company will include all of Random House and Penguin Group’s publishing divisions and imprints in the U.S., Canada, the UK, Australia, New Zealand, and India, as well as Random House’s publishers in Spain and Latin America, and Penguin’s trade publishing activity in Asia and South Africa. Headquartered in New York, the company is expected to generate annual revenues of about $3.9B. Random House chair and CEO Markus Dohle will be CEO of Penguin Random House. Penguin Group chief John Makinson will be chairman of the board.
Creation of the world’s leading consumer publisher is a step closer to reality. Pearson and Bertelsmann say the Justice Department has closed its review of the proposed merger of Penguin and Random House “without conditions”. Last October, Penguin’s owner Pearson and Random House owner Bertelsmann announced an agreement to join the two publishing houses. Under terms of the deal, Bertelsmann would own 53% and Pearson 47% of the new company, to be called Penguin Random House. The combined company would have about a 25%-30% share as the companies look to fend off competition in the e-book space. The proposed merger is still under review by the European Commission, the Canadian Competition Bureau and other groups. The publishers hope to close the deal later this year.
Despite reported last-minute interest from News Corp., UK-based Pearson has agreed to merge its Penguin with Bertelsmann’s Random House. It creates the world’s leading consumer publisher. The deal, announced Monday morning, comes after the News Corp.-owned Sunday Times said Rupert Murdoch had indicated he would offer about $1.6B for Penguin. A combination of Penguin and News Corp.’s HarperCollins would have had an English-language book market share of 20%, and appeared favored by analysts, according to Reuters. The combined Penguin Random House will have about a 25%-30% share as the companies look to fend off competition in the e-book space. The joint venture will be 53%-owned by Bertelsmann and 47%-owned by Pearson and is subject to regulatory and other approvals. It is expected to close in the second half of 2013. Following is the press release from Pearson:
News Corp is jumping into the bidding for Pearson’s Penguin book imprint, according to News Corp’s Sunday Times of London. News chairman and CEO Rupert Murdoch “has indicated he will make a substantial cash offer — thought to be about £1 billion ($1.6 billion) — for Penguin”, the Times said. An offer from News Corp could derail the planned merger of Penguin with Bertlesmann-owned Random House or ignite a bidding war. A combination of Penguin and HarperCollins would have an English-language book market share of 20%. A merger of Penguin and Random House would have about a 25%-30% market share. Publishers have been facing fierce competition from Amazon, Apple and Google in the e-book business.
Of course both of these publishers provide plenty of source material for Hollywood. Now the Financial Times is reporting that the parent companies of Random House and Penguin are in talks to combine the units. Random House’s Bertelsmann would have more than a 50% stake in any tie-up with Pearson’s Penguin, which combined could control one-quarter of the U.S. and UK publishing market, the paper says. The publishing sector has been facing fierce competition from the likes of Amazon, Apple and Google in the e-book business.