Paramount is on the verge of announcing a deal to sell Simon & Schuster, a leading publishing company, to private-equity firm KKR. This move comes after a lengthy attempt to sell the publisher. The agreement, valued at around $1.62 billion, is expected to be made public on Monday, though it is not yet finalized and could potentially fall through. Investors will be looking for an update on the publisher’s sale as Paramount reports its earnings.
If the deal goes through, it could have a significant impact on the book publishing industry, with Simon & Schuster being a major player in the field. This sale could also bring closure to employees and industry observers who have been anxiously awaiting a new owner for the company.
Previously, Paramount had put Simon & Schuster up for sale in 2020 and had announced a deal to sell it to Penguin Random House for $2.18 billion. However, the Biden administration challenged the merger on antitrust grounds due to concerns about the impact on authors. The deal was blocked by a judge, resulting in Penguin Random House paying a $200 million termination fee to Paramount.
The possibility of a private equity firm like KKR acquiring Simon & Schuster has raised concerns among publishing executives, fearing staff cuts and a reduction in book titles. However, private equity firms have previously entered the book industry, as seen with KKR’s acquisition of OverDrive and upcoming sale of RBmedia.
HarperCollins, the second-largest publisher in the country owned by News Corp., was also a contender in the bidding process. However, another deal with a major publisher could have faced regulatory challenges, despite the combination of HarperCollins and Simon & Schuster still being smaller than Penguin Random House alone.
Despite KKR offering a lower price than Penguin Random House, the difference is offset by the cash generated by Simon & Schuster and the termination fee paid to Paramount. Simon & Schuster, which will soon celebrate its 100th anniversary, has a rich history and publishes a wide range of titles, including best-sellers like “Too Much and Never Enough” by Mary L. Trump.
In recent years, Simon & Schuster has continued to perform well, with sales increasing by 19 percent in the first quarter of 2023, while other major publishers experienced disappointing results during the same period.
Overall, the imminent sale of Simon & Schuster to KKR could bring significant changes to the publishing industry and concludes a long search for a new owner for the renowned company.
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