Penguin Random Home has pulled out of a $2.2 billion deal to merge with Simon & Schuster

WASHINGTON, Nov 21 (Reuters) – Penguin Random Home, the world’s greatest ebook writer and Simon & Schuster rival, has scrapped a $2.2 billion merger deal, Penguin proprietor Bertelsmann ( BTGGg.F ) mentioned in an announcement.

Bertelsmann, the German media group that owns Penguin, initially mentioned it will enchantment a US decide’s ruling that the acquisition of Simon & Schuster could be unlawful as a result of it will hit authors’ pay.

However Bertelsmann mentioned in an announcement on Monday that it’ll “advance the expansion of the worldwide ebook publishing enterprise with out the prior merger of Penguin Random Home and Simon & Schuster.”

Reuters reported on Sunday that the German firm didn’t persuade Paramount International ( PARA.O ), the proprietor of Simon & Schuster, to increase the deal and enchantment the courtroom’s choice.

Decide Florence Pan of the U.S. District Court docket for the District of Columbia dominated on Oct. 31 that the Justice Division had proven that the deal considerably lessened competitors “available in the market for publishing rights for books bought in the US.”

With the dissolution of the deal, Penguin pays Paramount a severance fee of $200 million.

Paramount mentioned Monday that Simon & Schuster was a “basic asset” to Paramount. “It isn’t video-based and due to this fact doesn’t match strategically inside Paramount’s broader portfolio,” the corporate mentioned in a doc concerning the deal’s closing.

The Justice Division didn’t instantly reply to a request for remark.

In contrast to most merger battles, which concentrate on what customers pay, the Biden administration argued the deal ought to be stopped as a result of it will result in much less competitors for best-selling books and smaller advances for authors making $250,000 or extra.

Penguin writers embody cookery creator Ina Garten and novelists Zadie Smith and Danielle Steele, whereas Simon & Schuster publishes Stephen King, Jennifer Weiner and Hillary Rodham Clinton, amongst others.

The US Division of Justice filed a lawsuit looking for to droop the settlement in November 2021.

At hearings in August, the federal government argued that the 5 greatest publishers management 90% of the market, and {that a} mixed Penguin and Simon & Schuster would management virtually half of the marketplace for publishing rights to blockbuster books, whereas its closest opponents could be smaller. than half its measurement.

The highest 5 publishers are Penguin Random Home, HarperCollins, Macmillan, Simon & Schuster and Hachette, whereas Walt Disney Co ( DIS.N ) and Inc ( AMZN.O ) are additionally available in the market. HarperCollins is owned by Information Corp ( NWSA.O ).

Reporting by Diane Bartz and Klaus Lauer; Modifying by Tomasz Janowski and Rosalba O’Brien

Our requirements: Thomson Reuters Belief ideas.

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