Bertelsmann snaps up Simon & Schuster in $2.2bn deal
The German media group behind Penguin Random House has acquired US publisher Simon & Schuster for $2.2bn (£1.6bn).
Bertelsmann today confirmed it had secured the deal with owner Viacom CBS following a closely-fought bidding war.
The takeover cements Bertelsmann’s position as the world’s largest book publisher, and strengthens its footprint in the US — its second biggest market.
“Following the full acquisition of Penguin Random House in April this year, this purchase marks another strategic milestone in strengthening our global content businesses,” said chief executive Thomas Rabe.
“The book business has been part of Bertelsmann’s identity since the founding of C. Bertelsmann Verlag more than 185 years ago and has lost none of its appeal to this day.”
The acquisition of Simon & Schuster, which last year reported revenue of $814m, is set to close in 2021 subject to regulatory approval.
Bertelsmann said the publisher will continue to be managed as a separate imprint under the Penguin Random House umbrella.
Simon & Schuster, which publishes bestselling authors including Stephen King and Dan Brown, was put up for sale in March following a strategic review at Viacom.
The auction attracted interest from Rupert Murdoch’s News Corp while Vivendi, the conglomerate owned by French billionaire Vincent Bollore, was also linked to a potential offer.
The deal adds to the portfolio of Bertelsmann, which owns a range of publishing assets and European TV group RTL.
But the takeover could also raise competition concerns due to the German conglomerate’s ownership of Penguin, which is the world’s largest publisher.
The sale to Bertelsmann will create a publisher that is larger than the next seven rivals combined in total book sales, a publishing industry source told CityAM
It will also result in the company controlling 70 per cent of the US literary and general fiction publishing market, the source said.
“There is clearly no market logic to a bid of that size — only anti-market logic,” News Corp chief executive Robert Thomson said in response to the deal.
“Bertelsmann is not just buying a book publisher, but buying market dominance as a book behemoth. Distributors, retailers, authors and readers would be paying for this proposed deal for a very long time to come.”
But Bertelsmann today played down antitrust concerns, pointing to the lack of regulatory objections to the merger of Penguin and Random House in 2013.
It added that the combined market share of Penguin Random House and Simon & Schuster will be below 20 per cent, and pointed to industry disruption from Amazon as a mitigating factor.
Simon & Schuster, which is one of the so-called Big Five publishers, boasts a back catalogue of best-sellers including Joseph Heller’s Catch-22 and Dale Carnegie’s How to Win Friends and Influence People, as well as authors such as Ernest Hemingway and F. Scott Fitzgerald.
More recently, the publisher has released a series of blockbuster hits about the Trump administration, including Rage by Bob Woodward, John Bolton’s The Room Where It Happened and Too Much and Never Enough, an explosive expose by his niece Mary L. Trump.