The Penguin logo appears on the back of books displayed on a shelf at Book Passage on November 2, 2021 in Corte Madera, California. The US Department of Justice has sued Penguin Random House and Simon & Schuster to prevent the two companies from completing a $2.175 billion merger.
Justin Sullivan | Getty Images News | Getty Images
Paramount Global On Monday, it said it had canceled a $2.2 billion deal to sell book publisher Simon & Schuster to rival Penguin Random House, weeks after a federal judge rejected the merger.
Penguin, which is owned by German media conglomerate Bertelsmann, said it still believes Simon & Schuster is a good fit for its business, but has accepted Paramount’s decision.
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“We believe the judge’s ruling is wrong and plan to appeal the decision, and we are confident in our ability to present a persuasive and compelling case to overturn the lower court’s ruling on appeal,” Penguin said in a statement Monday afternoon. “However, we have to accept Paramount’s decision not to proceed.”
Paramount’s decision to pull the deal came more than a year after it sued the Justice Department to block the deal, saying it would hurt competition for books in the publishing world. On Halloween, after a trial that included testimony from best-selling horror author Stephen King, US District Court Judge Florence Y. Ban ruled Halloween against the deal, marking a major victory for the Biden administration’s antitrust agenda.
King, who writes books for Simon & Schuster, said he was “delighted” with the ruling. “The proposed merger wasn’t about readers and writers; it was about preserving (and increasing) PRH’s market share. In other words: $$$,”
In its announcement Monday, Paramount said Penguin is on the hook for a $200 million termination fee.
Paramount has also indicated that it will still seek to offload Simon & Schuster.
“Simon & Schuster is a highly valued company with a recent record of strong performance,” said Paramount. However, it is not video-based and therefore does not fit strategically into Paramount’s broader portfolio.
Read the full Paramount release here:
Paramount Global (f/k/a ViacomCBS Inc.) (“Paramount”) announced that it and certain of its affiliates have entered into a stock purchase agreement (“Purchase Agreement”) to sell the Simon & Schuster business to Penguin Random House LLC (part of the Bertelsmann Group). SE & Co. KGaA, “Penguin Random House”), is subject to meeting certain customary conditions, including receipt of applicable regulatory approvals (“Sell”).
On November 2, 2021, the United States Department of Justice (“DOJ”) filed suit in the United States District Court for the District of Columbia to prevent the sale and on October 31, 2022, the court ruled in favor of the DOJ, ordering the sale (“Decision”). Following the decision, on November 21, 2022, Paramount terminated the purchase agreement in accordance with its terms. Penguin Random House is obligated to pay Paramount a $200 million termination fee. Simon & Schuster remains a non-core asset for Paramount, as determined in early 2020 when Paramount conducted a strategic review of its assets.
Simon & Schuster is a highly valued company with a recent record of strong performance. However, it is not video-based and therefore does not fit strategically into Paramount’s broader portfolio.
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