Paramount Global said Monday it scrapped its $2.2 billion deal to sell book publisher Simon & Schuster to rival Penguin Random House, weeks after a federal judge rejected the merger.
Penguin, which is owned by German media conglomerate Bertelsmann, said it still believes Simon & Schuster is a good fit for its business but that it accepted Paramount’s decision.
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“We believe the judge’s ruling is wrong and planned to appeal the decision, confident we could make a compelling and persuasive argument to reverse the lower court ruling on appeal,” Penguin said in a statement Monday afternoon. “However, we have to accept Paramount’s decision not to move forward.”
Paramount’s decision to pull the plug on the deal came more than a year after the Justice Department sued to block the deal, saying it would hurt competition for books in the publishing world. On Halloween, after a trial that included testimony from bestselling horror author Stephen King, U.S. District Court Judge Florence Y. Pan ruled against the deal, delivering a major victory for the Biden administration’s antitrust agenda.
King, who writes books for Simon & Schuster, said he was “delighted” by the ruling. “The proposed merger was never about readers and writers; it was about preserving (and growing) PRH’s market share. In other words: $$$,” he tweeted.
In its announcement Monday, Paramount said Penguin is on the hook for a $200 million termination fee.
Paramount also indicated that it would still seek to unload Simon & Schuster.
“Simon & Schuster is a highly valuable business with a recent record of strong performance,” Paramount said. “However, it is not video-based and therefore does not fit strategically within Paramount’s broader portfolio.”
Read Paramount’s full release here:
Paramount Global (f/k/a ViacomCBS Inc.) (“Paramount”) announced that it and certain of its subsidiaries had entered into a Share Purchase Agreement (the “Purchase Agreement”) to sell the Simon & Schuster business to Penguin Random House LLC (part of the Bertelsmann SE & Co. KGaA group, “Penguin Random House”), subject to the satisfaction of certain customary conditions, including receipt of applicable regulatory approvals (the “Sale”).
On November 2, 2021, the U.S. Department of Justice (the “DOJ”) filed suit in the United States District Court for the District of Columbia to block the Sale and on October 31, 2022, the Court ruled in favor of the DOJ, enjoining the Sale (the “Decision”). Following the Decision, on November 21, 2022, Paramount terminated the Purchase Agreement in accordance with its terms. Penguin Random House is obligated to pay a $200 million termination fee to Paramount. Simon & Schuster remains a non-core asset to Paramount, as was determined in early 2020 when Paramount conducted a strategic review of its assets.
Simon & Schuster is a highly valuable business with a recent record of strong performance; however, it is not video-based and therefore does not fit strategically within Paramount’s broader portfolio.