This story originally appeared on Publishers Weekly on 10/29/12.
In a deal that had been months in the making, Pearson and Bertelsmann announced Monday morning that they have signed an agreement to form a joint venture that will combine the businesses of Random House and Penguin. The deal, which is expected to close in the second half of 2013, will make Penguin Group chairman John Makinson chairman of the newly named Penguin Random House company, while Random House chairman and CEO Markus Dohle will be CEO.
Under the terms of the agreement, 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.
The announcement came after word leaked Sunday that News Corp. was considering making an offer for Penguin, but Makinson said the Pearson board is committed to the Bertelsmann deal. And Pearson and Bertelsmann executives made it sound like they were proceeding as they expect the merger to move forward.
“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,” said Pearson CEO Marjorie Scardino.
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.”