The New York Times reports that Random House and Penguin will merge. An agreement for the merger was reached over the weekend. News Corp., which owns HarperCollins, made an offer for Penguin over the weekend, but it was rejected. A source told the Times that the reason that the Pearson didn't just sell Penguin directly was because it would have triggered a huge tax problem for the company in the U.S. Merging Penguin and Random House will have less burdensome tax consequences.
Both Bertelsmann and Pearson confirmed to the Times that the merger is definitely happening and that it will create the
largest consumer book publisher in the world. U.S. and European regulators will have to approve the merger, but that is not expected to be a problem. Under the agreement. Random House's Markus Dohle will be the chief executive officer of the new company Penguin Random House. The new company will be owned by Bertelsmann (53%) and by Pearson (47%). The company will have
annual revenues of $3.8 billion. No cash will change hands.
Penguin Random House is expected to devote a great deal of resources to digital content and ebooks on a global scale.
