Penguin, Random House announce mega-merger

Combined company could have eye toward ebook market

In a big move in book publishing circles last week, Bertlesmann and Pearson announced a merger of their trade book publishing divisions Random House and Penguin. PaidContent reports it's at least partly related to a shift to electronic and digital book publishing. 

The merger itself is rather complicated as it involves two large corporations, but after the merger, Bertelsmann will own 53 percent while Pearson controls 47 percent of the newly combined entity. After the deal is approved and finalized, Markus Dohle, Chairman and Chief Executive Officer of Random House worldwide, will be CEO of the new group. John Makinson, Chairman and CEO of Penguin, will become Chairman of the Board of Directors. Got that? Good.

Interestingly enough, while the combined company gives the organizations true worldwide reach, the two publishers will continue to operate as separate entities and maintain their own focuses as before. In a letter to Random House employees explaining the merger, Random House chairman and CEO Markus Dohle assured them that Random House would continue to operate much as it had prior to the merger.

"As the CEO of the combined business, my commitment to you and our new colleagues is to retain the distinct identities of both companies' imprints, where authors remain the center of everything we do. Authors and their agents will continue to enjoy an enormous choice of publishing homes, where creative autonomy and great resources will be a defining hallmark," Dohle wrote. 

According to a statement from Bertlesmann CEO Thomas Rabe, the merger continues the company goals for worldwide expansion, building growth platforms and digital transformation. "The combination of Random House and Penguin, first of all, significantly strengthens book publishing, one of our core businesses. Second, it advances the digital transformation on an even greater scale, and third, it increases our presence in the target growth markets Brazil, India and China."

Whatever the reasons, it appears that this will be a powerful combination and one that controls much of the book publishing market in the world. I wonder what EU regulators will have to say about it, but if it helps advance ebook and digital publishing, it could be a transformative deal.

The merger is expected to be finalized in the quarter of 2013 after regulators have a go at it.

For more information:
- see the Bertelsmann press release

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