Simon & Schuster's owner to let sale to Penguin fall apart, sources say
NEW YORK, Nov 20 (Reuters) - Book publishing powerhouse Simon & Schuster's owner will let its USD 2.2 billion sale to Penguin Random House collapse today (November 21), opening the door for a new suitor to try to clinch a deal, according to people familiar with the matter.
The acquisition was blocked on November 1 by a federal judge on antitrust grounds. German media group Bertelsmann SE & Co, which owns Penguin, was unable to convince Paramount Global, Simon & Schuster's current owner, to help launch an appeal and extend the deal contract before it expires on Monday, the sources said.
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Bertelsmann will owe Paramount a USD 200 million break-up fee as a result of the transaction falling apart.
The sources requested anonymity ahead of official announcements this week. Paramount declined to comment, while a Bertelsmann spokesperson did not respond to a request for comment.
The US Justice Department had sued to stop the tie-up of the two publishers, which combined would have accounted for more than 25% of all print books sold in the United States this year.
In its complaint, it argued the deal would lead to lower earnings for authors because of the reduced competition. Best-selling author Stephen King testified in favor of the government's arguments during the trial.
Penguin writers include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon & Schuster publishes King, Jennifer Weiner and Hillary Rodham Clinton, among others.
The top five US publishers are Penguin, HarperCollins, Macmillan, Simon & Schuster, and Hachette.
Following a collapse of the deal, Paramount will be free to explore a sale of Simon & Schuster anew. Previously known as ViacomCBS, Paramount had inked the Penguin deal so it could focus on its video and streaming businesses.
HarperCollins, which is controlled by News Corp, and Lagardere SCA's Hachette Book Group have previously expressed interest publicly in buying Simon & Schuster.
HarperCollins also unsuccessfully bid for Simon & Schuster when it was put up for sale by Paramount in early 2020.
HarperCollins and Hachette did not respond to requests for comment.
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