Rivals Random House and Penguin join forces

October 29, 2012
October 29, 2012

The UK’s Pearson and Germany’s Bertelsmann, two of the world’s biggest media groups, have agreed to merge two of the world’s biggest book publishers, their Penguin and Random House units. The combined company will be a joint venture called Penguin Random House and will account for roughly a quarter of global English-language consumer book sales globally (paywall).

The traditional consumer publishing industry is under threat from digital platforms and eBooks. The rationale for the tie-up is that it gives the former rivals greater resources to invest in digital publishing and emerging markets, as well as synergies that come from sharing resources such as warehousing, distribution, printing, etc.

Bertelsmann will own 53% of the merged entity, while Pearson, owner of the Financial Times will own 47%. The exact deal value was not disclosed, but an informed source has estimated it between $2 billion and $3 billion (paywall).

Markus Dohle, Random House’s chief executive will lead the company, while John Makinson, Penguin’s leader will become its chairman.

Rumors of the deal have been in the press as News Corp, owner of HarperCollins, has also been sniffing around, and made an informal possible cash offer to Pearson for Penguin (paywall). The deal gives the combined entity presence in the US, UK, Australia, Canada, New Zealand, India, South Africa, China, Spain, and Latin America.

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