British publisher Pearson PLC yesterday said it had agreed to merge its Penguin books division with English-language rival Random House, owned by German media giant Bertelsmann.
Penguin and Random House will combine their businesses in a newly created joint venture named Penguin Random House, a statement said. Bertelsmann would own 53 percent of the joint venture and Pearson 47 percent.
The tie-up is expected to be completed in the second half of next year, subject to regulatory approvals.
“The combination brings together two of the world’s leading English language publishers, with highly complementary skills and strengths,” the statement said.
“Random House is the leading English language publisher in the US and the UK, while Penguin is the world’s most famous publishing brand and has a strong presence in fast-growing developing markets,” it said.
Bertelsmann is to nominate five directors to the board of Penguin Random House and Pearson four. John Makinson, currently chairman and chief executive of Penguin, is to be chairman of Penguin Random House, and Markus Dohle, currently chief executive of Random House, its chief executive.
“Our new company will bring together the publishing expertise, experience, and skill sets of two of the world’s most successful, enduring trade book publishers,” Dohle said. “In doing so, we will create a publishing home that gives employees, authors, agents, and booksellers access to unprecedented resources.”
“Together, the two publishers will be able to share a large part of their costs, to invest more for their author and reader constituencies and to be more adventurous in trying new models in this exciting, fast-moving world of digital books and digital readers,” outgoing Pearson chief executive Marjorie Scardino said.
The joint venture excludes Bertelsmann’s trade publishing business in Germany, while Pearson is to retain rights to use the Penguin brand in education markets worldwide.
Last year, Random House reported revenues of 1.7 billion euros (US$2.2 billion) and operating profits of 185 million euros, while Penguin revenues hit ￡1 billion (US$1.6 billion) and operating profits of ￡111 million.
Meanwhile, Rupert Murdoch’s News Corp has expressed interest in acquiring Penguin and is preparing an offer for the business, said a person familiar with the matter, who asked not to be identified because the discussions are private.
Penguin is valued at ￡1 billion by News Corp, the Sunday Times reported on Sunday. The newspaper is owned by New York-based News Corp.