Penguin Books Owner Pearson Confirms Merger
Pearson, which owns the Financial Times, has agreed to merge its Penguin book division with Bertelsmann's Random House to create the world's leading publisher.
The move comes as traditional book publishers are confronted with the threat of concentrated buyers such as Amazon, who are in a strong position to negotiate favourable prices.
The education and media publisher Pearson said the newly-created joint venture would be named Penguin Random House, with Bertelsmann owning 53% and Pearson the rest.
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 will be its chief executive.
The companies said the combination means readers "will have access to a wider and more diverse range of content in multiple print and digital formats".
The news could be a blow to the media mogul Rupert Murdoch, as Pearson confirmed the joint venture one day after reports suggested his News Corp also made a direct bid for Penguin Books.
In addition to announcing the news about the merger, Pearson also took the opportunity to publish a trading update, showing the challenges facing the wider group.
While sales were up by 5% in the first nine months, operating profit was down by 5%, reflecting the sale of assets, acquisition costs and weakness in the British professional training market.
In 2011, Random House reported revenues of £1.48bn, whilst Penguin reported revenues of £1bn.
Pearson shares were up 2% at the beginning of the trading day, following the announcement about the merger.