TIDMPSON
RNS Number : 7207P
Pearson PLC
29 October 2012
Press release
29 October 2012
PEARSON AND BERTELSMANN AGREE CONSUMER PUBLISHING
PARTNERSHIP:
PENGUIN AND RANDOM HOUSE TO COMBINE,
CREATING THE WORLD'S LEADING TRADE PUBLISHER
Pearson and Bertelsmann today announce an agreement to create
the world's leading consumer publishing organisation by combining
Penguin and Random House.
The combination brings together two of the world's leading
English language publishers, with highly complementary skills and
strengths. 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. Both companies have a long history of
publishing excellence, and both have been pioneers in the dramatic
industry transformation towards digital publishing and
bookselling.
Under the terms of the agreement, Penguin and Random House will
combine their businesses in a newly-created joint venture named
Penguin Random House. Bertelsmann will own 53% of the joint venture
and Pearson will own 47%. The joint venture will exclude
Bertelsmann's trade publishing business in Germany and Pearson will
retain rights to use the Penguin brand in education markets
worldwide.
Bertelsmann will nominate five directors to the Board of Penguin
Random House and Pearson will nominate four. John Makinson,
currently chairman and chief executive of Penguin, will be chairman
of Penguin Random House and Markus Dohle, currently chief executive
of Random House, will be its chief executive.
In reviewing the long-term trends and considerable change
affecting the consumer publishing industry, Pearson and Bertelsmann
both concluded that the publishing and commercial success of
Penguin and Random House can best be sustained and enhanced through
a partnership with another major international publishing house.
They believe that the combined organisation will have a stronger
platform and greater resources to invest in rich content, new
digital publishing models and high-growth emerging markets. The
organisation will generate synergies from shared resources such as
warehousing, distribution, printing and central functions. Pearson
and Bertelsmann intend that the combined organisation's level of
organic investment in authors and new product models will exceed
the total investment of Penguin and Random House as independent
publishing houses.
The two companies believe that the combination will create a
highly successful new organisation, both creatively and
commercially, with the breadth and investment capacity to deliver
significant benefits. Readers will have access to a wider and more
diverse range of frontlist and backlist content in multiple print
and digital formats. Authors will gain a greater depth and breadth
of service, from traditional frontlist publishing to innovative
self-publishing, on a global basis. Employees of the new
organisation will be part of the world's first truly global
consumer publishing company, committed to sustained editorial
excellence and long-term investment in a rich diversity of content.
And shareholders will benefit from participating in the
consolidation of the consumer publishing industry without having to
deploy additional capital.
The combination is subject to customary regulatory and other
approvals, including merger control clearances, and is expected to
complete in the second half of 2013.
In 2011, Random House reported revenues of EUR1.7bn (GBP1.48bn)
and operating profit of EUR185m (GBP161m). Penguin reported
revenues of GBP1.0bn and operating profit of GBP111m with total
assets of GBP1.0bn. After completion, Pearson will report its 47%
share of profit after tax from the joint venture as an associate in
its consolidated income statement.
Under the terms of the agreement, neither Pearson nor
Bertelsmann may sell any part of their shareholding in Penguin
Random House for three years. To protect Pearson's interests as a
minority shareholder, if Bertelsmann declines a Pearson offer to
sell its entire shareholding, Pearson may require a
recapitalisation by which Penguin Random House raises debt of up to
3.5x EBITDA, with a dividend distributed to shareholders in line
with their ownership. In addition, from five years after
completion, either partner may require an IPO of Penguin Random
House.
Marjorie Scardino, chief executive of Pearson, said: "Penguin is
a successful, highly-respected and much-loved part of Pearson. This
combination with Random House - a company with an almost perfect
match of Penguin's culture, standards and commitment to publishing
excellence - will greatly enhance its fortunes and its
opportunities. Together, the two publishers will be able to share a
large part of their costs, to invest more for their author and
reader constituencies and to be more adventurous in trying new
models in this exciting, fast-moving world of digital books and
digital readers."
Thomas Rabe, chairman and CEO of Bertelsmann, said: "With this
planned combination, Bertelsmann and Pearson create the best course
for new growth for our world-renowned trade-book publishers, to
enable them to publish even more effectively across traditional and
emerging formats and distribution channels.It will build on our
publishing tradition, offering an extraordinary diversity of
publishing opportunities for authors, agents, booksellers, and
readers, together with unequalled support and resources."
ENDS
For more information:
Pearson:
Luke Swanson / Simon Mays-Smith / Charles Goldsmith +44 (0) 20 7010 2310
Penguin:
Becca Sinclair +44 (0) 20 7010 4279
Brunswick (for US media enquiries):
Oliver Phillips + 1 212 333 3810 ext 669
About Pearson
Pearson is an international education and information company
with world-leading businesses in education, business information
and consumer publishing.
Pearson is the world's leading learning company, providing
educational materials, technologies, assessments and related
services to teachers and students of all ages. We publish across
the curriculum under a range of respected imprints and are also a
leading provider of electronic learning programmes and of test
development, processing and scoring services to educational
institutions, corporations and professional bodies around the
world.
The Financial Times Group provides business and financial news,
data, comment and analysis, in print and online, to the
international business community. It includes the globally-focused
Financial Times newspaper and FT.com website; a range of specialist
financial magazines and online services; and Mergermarket, which
provides proprietary forward-looking insights and intelligence to
businesses and financial institutions.
Penguin, founded by Allen Lane in 1935, is today one of the
world's leading English language publishers and the most famous
brand in the industry. Penguin publishes 4,000 titles every year
for readers of all ages and in print and digital formats. Its
extensive range of titles includes top literary prize winners,
classics, reference volumes and children's titles.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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