Bertelsmann buys Simon & Schuster for $2.2bn

German media giant Bertelsmann said it is further expanding its global content businesses with the acquisition of publishing house Simon & Schuster in the US.

Bertelsmann said its publishing group Penguin Random House is purchasing Simon & Schuster from ViacomCBS for $2.175 billion in cash.

Bertelsmann outbid Rupert Murdoch’s News Corp in a contest for the publisher.

“Simon & Schuster strengthens Bertelsmann’s footprint globally, and particular in the US, its second-largest market,” said Bertelsmann.

“Simon & Schuster employs around 1,500 people worldwide and generated revenues of $814 million in 2019.

“It publishes works from well-known authors and public figures including Hillary Clinton, John Irving, Stephen King and Bob Woodward.”

The transaction is subject to regulatory approvals and is expected to close during 2021.

News Corp CEO Robert Thomson criticised the deal, saying the transaction had an “anti-market logic.”

Thomson said: “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.”

Simon & Schuster will continue to be managed as a separate publishing unit under the Penguin Random House umbrella.

Jonathan Karp, President & CEO of Simon & Schuster, and Dennis Eulau, COO and CFO, will continue at the helm of the publishing house.

Bertelsmann chairman and CEO Thomas Rabe said: “Following the full acquisition of Penguin Random House in April this year, this purchase marks another strategic milestone in strengthening our global content businesses, which include Penguin Random House, the Fremantle TV production business, and the BMG music division.

“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.

“Bertelsmann continues to be one of the world’s leading creative companies with annual investments in content of around €6 billion.

“Bertelsmann will finance the acquisition of Simon & Schuster from existing cash resources.

“External borrowing is not necessary, thanks partly to the overall positive business development since the summer and the already completed sale of various businesses, investments and real-estate properties.”

Penguin Random House CEO Markus Dohle said: “Simon & Schuster is an extremely well-managed and extraordinarily attractive company with world-renowned authors, 2,000 new publications annually, and a catalog of 35,000 titles.

“We are very proud to welcome this esteemed company, founded in 1924, to our global publishing community.

“We share the same passion for books and reading and will work together to give our authors the greatest possible access to readers worldwide.

“Penguin Random House empowers its 320 publishers around the world with maximum creative and entrepreneurial freedom and will, of course, extend this to our new colleagues at Simon & Schuster.”

Penguin Random House, comprising more than 320 imprints, employs 10,000 people worldwide. The group publishes around 15,000 new books a year.

On November 17, the first part of former US President Barack Obama’s memoirs “A Promised Land” was published by the firm to great success.

The biggest-selling novel in the first half of 2020 was the publisher’s “Where the Crawdads Sing” by Delia Owens, which sold more than 1.6 million copies.

J.P. Morgan Securities LLC acted as financial advisor, Davis Polk & Wardwell LLP as legal counsel and Arnold & Porter as regulatory counsel to Bertelsmann on the transaction.

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.