Bertelsmann to take control of Penguin Random House in $675-m buyout of Pearson
20 December 2019
Germany’s Bertelsmann SE will acquire full ownership of Penguin Random House by acquiring the 25 per cent stake that British media group Pearson holds in the company, for $675 million.
The acquisition will bring the world’s biggest trade publishing group within its family-run music, television, and print media conglomerate as it expands in the US.
The acquisition of shares is subject to the necessary official approvals. The transaction is expected to close in the second quarter of 2020. Germany’s Verlagsgruppe Random House, which is wholly owned by Bertelsmann will become part of Penguin Random House. Once regulatory approvals have been obtained, the New York-based book publishing group will be comprised of more than 300 individual publishing imprints on six continents.
“The increase to 100 per cent is a milestone for Bertelsmann. We will become the sole owner of the world’s biggest trade publishing group, which sets standards with its creative diversity, global marketing power, and commercial strength. We will continue to expand Penguin Random House in the coming years, through organic growth and acquisitions,” Thomas Rabe, chairman and CEO of Bertelsmann and chairman of the board of directors at Penguin Random House, said.
“The book business is part of Bertelsmann’s identity. For us and our shareholders, the transaction is commercially attractive, as the share of Bertelsmann’s shareholders in group profit will increase by more than €70 million per year,” he added.
Bertelsmann and Pearson had originally combined their respective Random House and Penguin Group book-publishing businesses in 2013. Bertelsmann initially held 53 per cent of the new company Penguin Random House, and Pearson 47 per cent. In 2017, Bertelsmann increased its stake to 75 per cent.
Penguin Random House currently comprises around 275 individual publishers; a further 47 book publishing imprints belong to the Munich-based Verlagsgruppe Random House. In 2018, Bertelsmann’s book division generated total revenues of €3.4 billion and an operating profit of €528 million. In 2018, 481 Penguin Random House titles made the “New York Times” bestseller lists, 69 of them rising to number one.
Bertelsmann is a media, services and education company that operates in about 50 countries around the world. It includes the broadcaster RTL Group, the trade book publisher Penguin Random House, the magazine publisher Gruner + Jahr, the music company BMG, the service provider Arvato, the Bertelsmann Printing Group, the Bertelsmann Education Group and Bertelsmann Investments, an international network of funds.
The company has 117,000 employees and generated revenues of €17.7 billion in the 2018 financial year.