Simon & Schuster to let its $2.2 billion sale to Penguin collapse
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Simon & Schuster’s owner will allow a $2.2 billion sale to Penguin Random House to collapse. The falling apart of this deal will pave the way for another interested party to secure this deal. The acquisition of the book publishing powerhouse was halted on November 1 by a federal judge citing antitrust.
Simon & Schuster to let its $2.2B sale to Penguin collapse
Bertelsmann SE & Co, the company behind Penguin, failed to make a convincing case to Paramount Global, the current owner of Simon & Schuster, to facilitate the launch of an appeal and extend the contract of this deal before it expired.
With the deal no longer going ahead as intended, Bertelsmann will be required to pay Paramount a $200 million break-up fee. The deal between the two companies has been at loggerheads even before the current fallout.
The US Justice Department sued to halt the deal between the two publishers. If the deal had gone through, the two publishers would have realized an over 25% market share of all the print books sold within the United States during the year.
The DoJ’s complaint further argued that this deal would drop the earnings made by authors because competition would be reduced significantly. Some of the best-selling authors, including Stephen King, have sided with the government in the trial against the merging of the publishers.
Some writers working with Penguin include the cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele. On the other hand, Simon & Schuster publishes Jennifer Weiner, King, Hillary Rodham Clinton, and several others. The other five US publishers that have worked with the company include HarperCollins, Macmillan, Simon & Schuster, and Hachette.
Renewed interest in Simon & Schuster
With the deal now collapsed, it will be possible for Paramount to explore the sale of Simon &Schuster afresh. The company had earlier secured the deal with Penguin to allow it to focus on its video and streaming operations.
HarperCollins has also expressed interest in purchasing Simon & Schuster. HarperCollins is controlled by News Corp. Lagardere SCA’s Hachette Book Group has also shown public interest in purchasing the company. Harper Collins placed a bid for Simon & Schuster in early 2020 after Paramount put the publisher on sale. However, the bid was not successful.
