Random House, Penguin to merge

29 October 2012 Books+Publishing

Pearson and Bertelsmann have announced that they will merge the Penguin and Random House businesses.

Bertelsmann said in a statement on Monday 29 October that the new business will be called Penguin Random House. Bertelsmann will own 53% of the new company and will have five representatives on the company’s board. Pearson will own 47% of the company and will have four representatives on the board.

Random House worldwide chairman and chief executive Markus Dohle will be CEO of the new group and Penguin chairman and chief executive John Makinson will be chairman of the company’s board of directors.

Bertelsmann said the merger is scheduled to take place in the second half of next year and is subject to regulatory approval. Until the merger is complete, ‘the companies will maintain their current separate operations and continue conducting business independently’, said Bertelsmann.

The merger is likely to have local implications for the Australian and New Zealand markets, with the new publishing group to include the Penguin and Random House divisions and imprints in the US, Canada, the UK, Australia, New Zealand, India and South Africa, as well as Penguin’s publishing company in China and Random House’s Spanish-language operations in Spain and Latin America. Random House’s German publishing company Verlagsgruppe Random House will not be included in the new company and will continue to be owned by Bertelsmann. However, Bertelsmann said the Penguin and Random House brands will ‘continue to publish their books with the autonomy they presently enjoy, and retain their distinct editorial identities’.

Pearson added in a statement that ‘Pearson will retain rights to use the Penguin brand in education markets worldwide’. Pearson also said that under the terms of the agreement ‘neither Pearson nor Bertelsmann may sell any part of their shareholding in Penguin Random House for three years’.

Bertelsmann Chairman & CEO Thomas Rabe said the merger will allow the publishers to ‘create the best course for the future of our world-renowned trade-book publishers … by enabling them to publish even more effectively across traditional and emerging formats and distribution channels’. Rabe added that the merger will also increase Bertelsmann’s presence ‘in the target growth markets [of] Brazil, India and China’.

Pearson chief executive Marjorie Scardino said the merger ‘will greatly enhance [Penguin’s] fortunes and its opportunities’. ‘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,’ she said.

The announcement follows confirmation from Pearson last week that the two publishers were discussing a possible combination of the businesses. HarperCollins parent company News Corporation also indicated its interest in acquiring Penguin this week.

Bookseller+Publisher will report further on this news in this week’s Weekly Book Newsletter. To share your thoughts, email bookseller.publisher@thorpe.com.au.

Category: Local news