By Michael De La Merced
Ownership of one of the world’s biggest publishers is poised to change hands after Pearson said recently that it planned to sell its 47% stake in Penguin Random House, home of John Grisham, The Girl on the Train and Game of Thrones.
The most natural buyer is its partner, Bertelsmann of Germany, which owns 53% of Penguin. In a recent statement, Bertelsmann said it was “open” to buying Pearson’s stake.
Formed in 2013 by the merger of Bertelsmann’s Random House and Pearson’s Penguin, the combined business has boasted that it is one of the world’s most truly global book publishers, with some 250 imprints responsible for more than 15,000 books each year.
According to Bertelsmann, the publisher reported €3.7 billion ($3.93 billion) in sales in 2015 and €557 million in pro forma earnings.
For Pearson, the move to sell its piece of Penguin Random House comes during a slide in its North American education business. The company said that it expected sales for 2016 to be down about 8% as the education unit took a hit from lower school enrollment.
With 2017 looking no brighter, Pearson said it would sell its stake in Penguin to fortify its finances and pay dividends to shareholders. The discussions will begin with Bertelsmann, which has the right of first refusal to buy out its partner.
On a call with analysts, Pearson’s chief financial officer, Coram Williams, said the negotiations were expected to take months. If Pearson does not succeed in getting an attractive price, company officials said they would instead borrow against the stake to raise money.
Bertelsmann will have the chance to take full control of Penguin Random House and raise its exposure in the United States, an enormous book market that the German company deems core to its business.
“Strategically this would not only strengthen one of our most important content businesses, it would also once further strengthen our presence in the United States, our second-largest market,” said Thomas Rabe, Bertelsmann’s chairman and chief executive.
© 2017 The New York Times