Penguin and Random House merging to take on tech giants
BOOK publisher Penguin is to merge with rival Random House, owned by Germany's Bertelsmann, in a bid by traditional publishers to take on technology groups Amazon and Apple.
Pearson, the owner of Penguin, said the newly created joint venture is to be named Penguin Random House.
Under the plans, Bertelsmann will own 53pc of the venture and nominate five directors to the board, while Pearson would own the rest and nominate four. Both must retain their share in the venture for at least three years.
The deal was confirmed despite a last-minute approach from Rupert Murdoch's News Corp which tabled its own informal bid for Penguin over the weekend.
News Corp wanted to buy Penguin outright and merge it with its own Harper Collins publishing unit, a person familiar with the situation said.
"The consumer publishing industry is going through a period of tumultuous change, propelled by digital technologies and the giant companies that dominate them," Pearson chief executive Marjorie Scardino said in an email to staff.
"The book publishing industry today is remarkable for being composed of a few large, -- and a lot of relatively small -- companies, and there probably isn't room for them all. They're going to have to get together."
Penguin chairman and chief executive John Makinson will be chairman of the new venture, and Random House chief executive Markus Dohle will be chief executive.
Analysts said they would have preferred a bid from a group such as News Corp that brought cash into Penguin rather than the joint-venture deal.
Pearson said the joint venture could seek to raise debt after three years to pay both sides a dividend, if Bertelsmann opts not to exercise its right to buy out Penguin. (Reuters)