Bertelsmann to Take up PRH Buyout Option with Equity Partner?

PRHReuters today reported that Bertelsmann media group is moving a step closer to acquiring the remaining 47% of Penguin Random House. In 2012 Bertelsmann and Pearson agreed a deal to merge Random House with Penguin to form Penguin Random House. The merger created the largest global book publisher of two major brands. However, Reuters reports that Bertelsmann is looking for an private equity partner if Pearson agrees to relinquish its 47% ownership share.

A full acquisition of PRH by Bertelsmann was not expected until at least 2017, but a private equity partner may accelerate plans in early 2016.

A complete exit in one go by Pearson could be a financial challenge for Bertelsmann when it is investing to build up its own education business, aiming for 1 billion euros in mid-term sales, up from less than 200 million euros this year.

 

Talks between the two Penguin Random House owners are expected to resume next year, two sources said.

 

Bringing in a private equity partner would be a logical option to help ease the burden, the sources said.

 

Such a construction is not new to Bertelsmann Chief Executive Thomas Rabe, who used a similar deal structure to transform music business BMG with the help of Kohlberg Kravis Roberts.

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