Penguin Random House is the largest publishing company in the world, and they had their eyes set on one of the other large publishers, Simon & Schuster. The PRH was ready to pay $2.2 billion for it. Still, the deal was never finalized, due to the US Justice Department, citing the lack of competition—Penguin Random House to pay a $200 million termination fee to S&S parent company, Paramount. The entire saga might soon be over; Paramount has agreed to sell Simon & Schuster to KKR, a private equity firm, for $1.62 billion. This deal is subject to approval from the Justice Department and other international regulatory bodies, but is expected to go through.
Simon & Schuster, which publishes and distributes more than 36,000 titles and has over 1,600 employees, will operate as a standalone company. Simon & Schuster has had strong sales over the past two years. The publisher has scheduled some of the most anticipated fall releases, including Britney Spears’ memoir “The Woman In Me” and Walter Isaacson’s biography of Elon Musk.
KKR said it will create an employee equity ownership program after the deal closes. President and CEO Jonathan Karp, COO and CFO Dennis Eulau will continue leading S&S.
You might have yet to hear of KKR; they are one of the largest equity firms. They have over $510 billion in assets under management. They currently own Overdrive, which they bought from Rakuten. Overdrive is the largest company in powering libraries, audiobook and ebook collections in North America and Europe. They also own RB Media, otherwise known as Recorded Books. They are one of the largest audiobook companies.
We are pleased to have reached an agreement on a transaction that delivers excellent value to Paramount shareholders while also positioning Simon & Schuster for its next growth phase with KKR,” Paramount CEO Bob Bakish said in a statement. “The proceeds will give Paramount additional financial flexibility and greater ability to create long-term value for shareholders while also delivering our balance sheet.”
“With KKR’s support, we look forward to collaborating on new strategies that will enhance our ability to provide readers a great array of books and to give authors the best possible publication they can receive,” Karp said.
This is an excellent deal for the publishing industry. KKR has a hands-off approach to letting companies they own remain independent. S&S will go from a division of Paramount to a private company. They will no longer have to placette shareholders and can focus more on selling books, selling international rights deals and making more money.
Michael Kozlowski is the editor-in-chief at Good e-Reader and has written about audiobooks and e-readers for the past fifteen years. Newspapers and websites such as the CBC, CNET, Engadget, Huffington Post and the New York Times have picked up his articles. He Lives in Vancouver, British Columbia, Canada.