Penguin and Random House, two of the world’s top English-language publishing houses, have agreed to merge, it was announced on Monday, in a move seen as a precursor to more such mergers as the publishing industry struggles to overcome growing competition from digital publishing, notably Amazon.
At present, Penguin is owned by Pearson, publishers of The Financial Times, and Random House by the German media group Bertelsmann. The latter will control 53 per cent of the proposed joint venture, to be called “Penguin Random House’’, and Pearson 47 per cent.
The deal, which will create a business with estimated annual revenues of £2.5 billion accounting for 25 per cent of the British and American book markets, will be subject to normal regulatory approvals. It is expected to come into effect in the second half of 2013. There were calls for competition authorities to look at the deal closely, given the size of the merged group.
The move came as Rupert Murdoch’s News Corp, which owns HarperCollins, was reported to have approached Pearson with “substantial cash offer’’, estimated to be about £1 billion. But there was no official comment either from News Corp or Pearson.
Meanwhile, Pearson said the merger with Random House would “bring together two of the world’s leading English language publishers, with highly complementary skills and strengths.’’
“Random House is the leading English language publisher in the U.S. and the U.K., while Penguin is the world’s most famous publishing brand and has a strong presence in fast-growing developing markets. Both companies have a long history of publishing excellence, and both have been pioneers in the dramatic industry transformation towards digital publishing and bookselling,’’ it said.
Marjorie Scardino, Chief Executive of Pearson, said that together two publishers would be able to share a large part of their costs, and invest more in their authors.
Thomas Rabe, Chairman and CEO of Bertelsmann, described the proposed merger as “the best course for new growth for our world-renowned trade-book publishers.’’ “It will build on our publishing tradition, offering an extraordinary diversity of publishing opportunities for authors, agents, booksellers, and readers, together with unequalled support and resources,” he said.