PARIS Â Two European media companies, Bertelsmann and Pearson, confirmed Monday that they planned to combine their book publishing divisions, Random House and Penguin.
Under the agreement, Bertelsmann, which owns Random House, would control 53 percent of the merged publishers. Bertelsmann and Pearson would share executive oversight, with Markus Dohle of Random House serving as chief executive and John Makinson of Penguin becoming the chairman.
The deal would consolidate Random HouseÂs position as the largest consumer book publisher in the English-language world, giving the combined companies greater scale to deal with the challenges arising from the growth of e-books and the rise of Internet retailers like Amazon.
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Analysts have raised questions about possible regulatory hurdles to the deal, given that the combined companies would have around one-quarter of the consumer publishing business in markets like the United States. 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.
Pearson and Bertelsmann said Monday that Âthe combined organizationÂs level of organic investment in authors and new product models will exceed the total investment of Penguin and Random House as independent publishing houses.Â
Some literary agents, however, were unimpressed by the prospect of a combined Random House and Penguin, responding to reports of a possible deal last week by saying it could reduce the number of outlets for authors.
The companies said the agreement would exclude certain assets, including Random HouseÂs trade publishing business in Germany. Pearson will retain the right to use the Penguin brand in its education business, which has become the focus of the companyÂs plans for the future.
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News Corp.Âs interest in Penguin was first reported in The Sunday Times, a London paper that is also owned by News Corporation. According to The Times, News Corp. was exploring a cash offer of $1.6 billion.
More is at Bloomberg - http://www.bloomberg...random-house.html
Cheers,
Scott.