PRH's bid to buy S&S confirmed over

Simon & Schuster parent Paramount has confirmed the termination on Monday (21st November) of the purchase agreement made with Bertelsmann and Penguin Random House for the acquisition of S&S. The collapse of the acquisition followed judgment against the merger from Judge Florence Pan in October.

PRH will now have to pay a $200m termination fee to Paramount.

In a statement, PRH said: "Penguin Random House remains convinced that it is the best home for Simon & Schuster’s employees and authors, and together with Bertelsmann, we did everything possible to complete the acquisition. We believe the judge’s ruling is wrong and planned to appeal the decision, confident we could make a compelling and persuasive argument to reverse the lower court ruling on appeal. However, we have to accept Paramount’s decision not to move forward. We want to thank our Penguin Random House employees and the teams at Simon & Schuster for their support. We wish them the very best in the future, and look forward to continuing to make a positive impact on society through the books we are honoured to publish for readers everywhere."

Bertelsmann confirmed it would not now be pursuing its earlier plan to appeal against Judge Pan’s verdict, and said that instead it would continue to advance the growth of its global book publishing business without the merger, with PRH set to grow "significantly in the years ahead, both organically and through acquisitions".

Bertelsmann c.e.o. Thomas Rabe said: "The book business has been part of Bertelsmann’s identity for 187 years, and this will not change: Penguin Random House is part of the Global Content Strategy, one of our five strategic priorities. Bertelsmann plans to achieve annual growth of five to 10% in this area – organically, but also through acquisitions. In total, Bertelsmann will invest between five and seven billion Euros in the growth of its businesses in the years ahead as part of its Boost Plan. Significant investment funds will be available to Penguin Random House as well.”

In the filing for shareholders that announced the termination of the deal, Paramount described Simon & Schuster as a "non-core asset" and indicated that it still intends to sell S&S, saying the publisher was "a highly valuable business with a recent record of strong performance, however it is not video-based and therefore does not fit strategically within Paramount’s broader portfolio."

Earlier this month, HarperCollins president c.e.o. Brian Murray said the "door isn’t closed" on an HC acquisition of S&S.

However Mary Rasenberger, c.e.o. of US writers’ organisation the Authors Guild, which had opposed the merger with PRH, has now warned that the body would also be against any other mergers among the US "Big Five". Responding to the news of the termination of PRH’s bid, she said: “As the court’s analysis in the PRH lawsuit makes clear, the market for anticipated top-selling books is already highly concentrated. If either HarperCollins or Hachette were allowed to buy S&S, while the resulting company would not be as big as PRH and S&S combined, it would result in only four major publishers that regularly pay the kind of advances authors need to sustain a living (more or less) writing. It means there would be less competition for manuscripts, and it also makes it that much more difficult for small publishers to compete. A healthy publishing ecosystem is one that has many publishers of different sizes with different tastes, interests, views, and degrees of risk they are willing to assume. The bigger any of the Big Five is, the harder it is for the smaller and newer publishers to compete.”

S&S president and c.e.o. Jonathan Karp wrote to staff on Monday, saying: "This news is still fresh, and at this point I have no specific information to impart about what will happen in the coming months. You may read or hear rumours and speculation about our future, but you can be assured that I will keep you informed as soon as there is pertinent news I can share.
"I am grateful for your patience and dedication to our mission during all that has transpired over these many months since the sale began. Ultimately, what matters the most is the work we do together, on behalf of our authors and our books. Over the past three years, we have reached new heights of accomplishment. Simon & Schuster has never been more profitable and valuable than it is today. And that is because of the effort, ingenuity, and perseverance that you bring to our endeavours.

"As we put the finishing touches on one of the single greatest years in our history and head into 2023, I see numerous reasons to be optimistic about our future. We’ll be starting the new year with some tremendously exciting, sure-to-be-bestselling titles, which will be buttressed by the sales of what is currently the best-selling backlist in the publishing industry. As I have noted before, we will be celebrating our 100th anniversary in April of 2024, regardless of who our owner is – and we will have much to celebrate."