Penguin random house, John Fallon, chief executive of Pearson, said: “This combination creates a clear world leader with a strong platform for continued creative and commercial success in a rapidly-changing consumer publishing industry.”
The world headquarters of the Penguin Random House joint venture will be in New York. It will employ more than 10,000 people worldwide and generate annual revenues of around €3bn (£2.5bn).
The merger comes at a critical time for the companies, as well as for the wider book publishing industry which spent most of the last decade in major turmoil, as new online businesses like Amazon, Google and Apple tried to stake their claims on their traditional business.
Heavy discounting by online retailers and supermarkets has made it harder and harder for specialist book chains and independent booksellers to survive, leaving publishers with many fewer places to sell their products.
Meanwhile, the rapid adoption of e-books has driven prices down further, increased competition from self-published authors and made it considerably easier for people to get their hands on pirated copies of books.
Pearson and Bertelsmann hope that joining forces will give their publishing assets the scale they need to compete with the growing challenges to their business, by catapulting them ahead of rival Hachette to become the biggest publisher in the world.
The deal also scuppers plans by media tycoon Rupert Murdoch, who was reportedly mulling a £1bn cash offer for the book publisher.
The combined entity will have around a 27pc share of the UK’s book publishing market and 25pc share in the US.
Penguin owner Pearson will control 47pc of the Penguin Random House joint venture and Random House owner Bertelsmann the rest.
Thomas Rabe, the Bertelsmann chairman and chief executive, said: “Together, we can and will invest on a much larger scale than separately in diverse content, author development and support, the publishing talent, the entire spectrum of physical and digital book acquisitions, production, marketing, and distribution, and also in fast-growing markets of the future.”
Markus Dohle, the former chief executive of Random House, is chief executive of the new company and John Makinson, the former Penguin chief executive, is chairman.
Bertelsmann has appointed five representatives to the Penguin Random House board and Pearson four.
Representing Pearson are: John Makinson, chairman of Penguin Random House, John Fallon, chief executive of Pearson; Coram Williams, chief financial officer of Penguin Random House) and Philip Hoffman, senior Vice-President of Corporate Finance & Strategy at Pearson.
Tuesday, July 2, 2013
Penguin random house
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