Pearson to sell 22% of Penguin Random House to Bertelsmann
British publisher Pearson said on Tuesday it had agreed to sell almost half of its stake in Penguin Random House (PRH) to joint venture partner Bertelsmann of Germany.
The 22-per cent stake in PRH is being offloaded for 1.0 billion (877 million euros), a Pearson statement said. Bertelsmann will then own 75 per cent and Pearson will be left with 25 per cent.
Pearson had earlier this year signalled its intention to lower its holding in PRH. The transaction values PRH at 3.55 billion.
The joint venture -- billed as the world's leading mass publisher – was created in 2013 by combining Pearson's Penguin imprint with Bertelsmann's Random House.
"Penguin Random House is a success story... today the group is the clear worldwide number one in book publishing," Bertelsmann chief executive Thomas Rabe said in a statement.
The German firm's increased stake would bring it "more than 60 million euros" in additional profits attributable to shareholders, he added.
PRH groups together around 250 publishing houses with a total of around 15,000 new releases per year, generating $3.4 billion in revenue.
Among its top-selling titles are the US editions of George Martin's weighty fantasy series "Game of Thrones", as well as big-name authors like thriller writers John Grisham and Dan Brown or "Fifty Shades of Grey" creator E.L. James. The group has also secured the rights to publish upcoming books from former US president Barack Obama and his wife Michelle.
Bertelsmann – a pillar of German media whose empire includes broadcaster RTL and magazine publisher Gruner + Jahr -- said that the increased investment in PRH would allow it "greater governance rights" including naming the chairman of the board.
Penguin Random House chief executive Markus Dohle, who also sits on the Bertelsmann board, will continue to lead the publisher.
London-listed Pearson added on Tuesday it would use the proceeds to strengthen its balance sheet and return 300 million to shareholders via a share buyback.
Pearson added that it would continue to maintain a "significant" income stream from its remaining share in Penguin.
The deal is expected to complete in September 2017, subject to regulatory approval.
Back in January, Pearson issued a gloomy profit warning that sent its share price tumbling – and said it would sell holdings in PRH.