Penguin Random House and Simon & Schuster drop $2.2 billion merger deal
Penguin Random House, the world’s largest book publisher, and rival Simon & Schuster have called off a US$2.2 billion (C$2.9 billion) merger deal, the Penguin owner said, Bertelsmann, in a statement.
Bertelsmann, a German media group that owns Penguin, initially said it would appeal a US judge’s ruling that its purchase of Simon & Schuster would be illegal because it would hit the authors’ salaries.
But Bertelsmann said in a statement on Monday that it would « continue to grow its global book publishing business without the previously planned merger of Penguin Random House and Simon & Schuster. »
The US Department of Justice filed a lawsuit seeking to terminate the agreement in November 2021.
In hearings held in August, the US government argued that the five largest publishers control 90% of the market, and that a combined Penguin and Simon & Schuster would control almost half of the book publishing rights market. successful, while its closest competitors would control to be less than half its size.
The top five publishers are Penguin Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette, with Walt Disney Co and Amazon.com Inc also in the market. HarperCollins is owned by News Corp.
Unlike most merger fights, which focus on what consumers pay, the Biden administration argued the deal should be stopped because it would lead to less competition for bestselling books and more advances. low for authors earning $250,000 or more.
The Justice Department did not immediately respond to a request for comment.
Penguin will pay a $200 million termination fee
Reuters reported on Sunday that Bertelsmann failed to convince Paramount Global, the owner of Simon & Schuster, to extend their agreement and appeal the judge’s decision.
Judge Florence Pan of the U.S. District Court for the District of Columbia ruled Oct. 31 that the Justice Department had shown the deal could significantly lessen competition « in the market for U.S. publishing rights to the most popular books. » sold ».
With the dissolution of the agreement, Penguin will pay a termination fee of $200 million to Paramount.
Paramount said Monday that Simon & Schuster was a « non-core asset » for Paramount. « It is not video-based and therefore does not fit strategically into Paramount’s broader portfolio, » the company said in a filing about the termination of the deal.
Penguin writers include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steel, while Simon & Schuster publishes Stephen King, Jennifer Weiner and Hillary Rodham Clinton, among others.