Penguin, Random House ink merger JV

The world's two top English language rival publishers, Britain's Penguin Books and Germany's Random House, on Saturday struck a merger deal to create the globe's biggest book publisher.

The new company would be run as a joint venture known as Penguin Random House, with the tie-up expected to be completed in the second half of next year subject to regulatory approvals, the BBC reported.

The decision by two of Europe's largest publishing houses to merge their popular units for a bigger slice of the publishing largesse has sounded a note of caution among Indian publishers, who are waiting for the deal to reveal itself. British publisher Pearson owns Penguin books while English-language rival Random House is owned by German media giant Bertelsmann.

The German media giant Bertelsmann will own 53 per cent of the joint venture, Pearson will own 47 per cent.

The merger comes amid reports that Rupert Murdoch-run News Corp - which also owns Harper Collins - was bidding to make a substantial cash offer to takeover Penguin.

Complementary skills

"The combination brings together two of the world's leading English language publishers, with highly complimentary skills," a statement by Pearson said.

"Random House is the leading English language publisher in the US and the UK, while Penguin is the world's most famous publishing brand and has a strong presence in fast-growing developing markets," it said. Bertelsmann will nominate five directors to the board of Penguin Random House and Pearson four.

John Makinson, currently chairman and chief executive of Penguin, was to be chairman of Penguin Random House and Markus Dohle, currently chief executive of Random House, its chief executive.

In 2011, Random House's revenues were 1.7 billion euros with an operating profit of 185 million euros. Penguin recorded revenues of 1 billion pounds. Based on recent results, combining the two firms will create a business with annual revenues of about 2.5 billion pounds.

A section of leading publishing houses in the country felt that the deal could set in a wave of mergers of small and big players in the industry at the domestic level. The trend had begun showing on a smaller scale few years ago with publishing houses like Zubaan, Yatra Books and Westland Tranquebar Ltd tying up with bigger publishers for a wider distribution footprint. Rupa & Co, a mass market fiction leader in India, tied up with former Penguin CEOs David Davidar and Ravi Singh to set up Aleph Book Company, a literary fiction imprint which uses Rupa's resources.

It is too early to comment on the Penguin-Random Houser merger, said Kapish Mehra, publisher of Rupa & Co. “Let us see how the merger unfolds. I don't think the situation will change much on the ground,” Mehra said.

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