Pearson to sell its stake in Penguin Random House
Pearson has announced it intends to sell its 47% stake in Penguin Random House (PRH), reports the Bookseller.
Pearson will issue an exit notice to joint venture partner Bertelsmann, which holds a majority 53% stake in the publisher. Bertelsmann said it is ‘open’ to increasing its share if ‘the financial terms are fair’.
In a call with analysts, Pearson chief financial officer Coram Williams said it was the ‘right time’ to exit now that PRH has been integrated successfully. Williams also said under the conditions of the PRH merger in 2013, Pearson would not have another contractual window to issue the notice of exit until 2019.
Bertelsmann chairman and CEO Thomas Rabe said the book business has been the company’s ‘oldest core business’. ‘Accordingly, we are open to increasing our stake in Penguin Random House, provided the financial terms are fair,’ said Rabe. ‘Strategically this would not only strengthen one of our most important content businesses, it would also once further strengthen our presence in the United States, our second largest market.’
Rabe added he wanted PRH to continue to be the ‘clear number one in the publishing industry, both commercially and in terms of creativity,’ and the ‘publisher of choice for authors’.
Williams said there is ‘no set price’ for Pearson’s 47% stake, and that the two partners would try to work to a mutual agreement before getting independent advisors involved. According to the Guardian, Bertelsmann is expected to increase its stake to 75%, with the rest to be funded by private equity partners.
In an email to staff acquired by the Bookseller, PRH chief executive Markus Dohle said it would be ‘business as usual for both of us’ and that the process would ‘take a number of months’.
Staff at the PRH UK branch are said to be ‘jumpy,’ according to anonymous insiders reporting to the Guardian, despite some saying they knew it would happen. One senior executive expressed concerns over PRH UK’s attempt to terminate its collective agreement with trade unions Unite and the National Union of Journalists over staff redundancy terms in late 2016, saying, ‘this sort of thing always makes people nervous, but especially so after what happened.’
PRH UK chief executive Tom Weldon denied the union dispute had any connection with the Pearson sale, stating it was about the implementation of a single collective bargaining agreement to reflect the merger.
Pearson also reported in its January trading statement that it is cutting its profit forecast for 2017 and lowering its dividend, which saw the company’s share prices drop 23% on the London Stock Exchange.
Pearson chief executive John Fallon said despite ‘significant steps on restructuring’ and a reduced cost base in the previous year, ‘higher education business declined further and faster than expected in 2016’. ‘So we are taking more radical action to accelerate our shift to digital models, and to keep reshaping our business,’ said Fallon.
Category: International news