BMG Parent Bertelsmann to Acquire Full Stake in Penguin Random House

GÜTERSLOH, GERMANY — Media giant Bertelsmann, parent of BMG, announced plans on Wednesday to become the sole owner of Penguin Random House, the world’s largest publishing company. Bertelsmann will acquire the remaining 25% stake of the publisher now held by its British co-shareholder Pearson, increasing its own stake to 100 percent, at the purchase price of $675 million.

The acquisition is subject to regulatory approval and is expected to close in the second quarter of 2020. Bertelsmann chairman and CEO Thomas Rabe said as part of the deal, Germany-based Verlagsgruppe Random House will become part of the Penguin Random House umbrella. Once approved, the publishing group will be comprised of more than 300 imprints across six continents.

"The increase to 100 percent is a milestone for Bertelsmann," said Rabe, who is also chairman of the board of directors of Random House. "We will become the sole owner of the world’s biggest trade publishing group, which sets standards with its creative diversity, global marketing power, and commercial strength. We will continue to expand Penguin Random House in the coming years, through organic growth and acquisitions. The book business is part of Bertelsmann's identity. For us and our shareholders, the transaction is commercially attractive, as the share of Bertelsmann’s shareholders in group profit will increase by more than €70 million per year."

Bertelsmann and Pearson previously combined their respective Random House and Penguin Group book-publishing businesses in 2013. Bertelsmann initially held 53 percent of the new company Penguin Random House, and Pearson 47 percent. In 2017, Bertelsmann increased its stake to 75 percent. Penguin Random House currently comprises around 275 individual publishers; a further 47 book publishing imprints belong to the Munich-based Verlagsgruppe Random House, which Bertelsmann owns outright.

In 2018, Bertelsmann’s book division generated total revenues of €3.4 billion and an operating profit of €528 million. In 2018, 481 Penguin Random House titles made the New York Times bestseller lists, 69 of them rising to number one.

"The full acquisition of Penguin Random House is a testament to Bertelsmann’s belief in the future of books and reading, as well as their trust in our colleagues around the world to be able to grow our company over the next several years," commented Markus Dohle, CEO of Penguin Random House. "We are extremely well positioned to continue to take advantage of both organic and acquisitive growth opportunities in existing and new markets globally."

Bertelsmann operates in about 50 countries around the world, with a catalog of companies that includes the music company BMG, broadcaster RTL Group, magazine publisher Gruner + Jahr, and the service provider Arvato, among others.

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