Random House will merge with Penguin


Random House will merge with Penguin, the companies said Monday, creating Penguin Random House, a publisher with about 25% of the American trade publishing market. Penguin Random House is expected to debut in late 2013.

The parent companies -- Germany’s Bertlesmann (Random House) and England’s Pearson (Penguin) -- inked a deal early Monday, according to news reports. The news came fast on the heels of several reports that Rupert Murdoch’s News Corp. was prepared to make a $1.6-billion bid for Penguin.

The deal between Bertlesmann and Pearson is for even more; the Wall Street Journal cites an anonymous source as saying it will be between $2 billion and $3 billion.


Because Bertlesmann, the world’s largest bookseller, and Pearson, another major international player, have such wide reach, the deal is expected to have some complexities. The U.K.’s Bookseller reports “the joint venture will exclude Bertlesmann’s trade publishing business in Germany and Pearson will retain rights to use the Penguin brand in education markets worldwide.”

The New York Times reports that “teams of lawyers from both companies are said to have been huddling in New York for weeks to examine these and other issues related to the deal.”

The administration of Penguin Random House will be jointly controlled by Bertlesmann and Pearson, with Bertlesmann holding more of the cards: 53% to Pearson’s 47%.

In a joint statement, the companies said: “The combined organization’s level of organic investment in authors and new product models will exceed the total investment of Penguin and Random House as independent publishing houses.”

That could be good news, in a move that many in publishing observe with trepidation. With the merger complete, the number of major American publishing houses will drop from six to five.



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