Pearson sells remaining 25% stake in PRH to Bertelsmann

Monday, 13 January 2020 Books+Publishing

Pearson is selling its remaining 25% stake in Penguin Random House (PRH) to Bertelsmann, giving the German corporation 100% ownership of the world’s largest trade publisher, reports the Bookseller.

The sale is said to be worth £530 million (A$1 billion), and is expected to be finalised within the first half of 2020. The transaction puts the value of PRH at US$3.67 billion (A$5.32b), up from the $3.55 billion enterprise valuation in 2017, when Pearson sold a 22% stake in PRH to Bertelsmann.

Pearson CEO John Fallon, who is retiring this year, said the sale is part of an ongoing process of ‘simplification’ for the company, and that it enabled Pearson ‘to be completely focused’ on its education and digital learning business.

Chairman and CEO of Bertelsmann Thomas Rabe—also chairman of the board of directors at PRH—said: ‘We will continue to expand Penguin Random House in the coming years, through organic growth and acquisitions. The book business is part of Bertelsmann’s identity. For us and our shareholders, the transaction is commercially attractive, as the share of Bertelsmann’s shareholders in group profit will increase by more than €70 million (A$112.7 million) per year.’

Analyst Sarah Berenberg told the Bookseller: ‘While the disposal obviously means, short term, some cash return to shareholders, we think it increases the reliance on the other parts of the business, some of which have been performing very poorly. PRH has been a solid asset, which has provided ballast to Pearson. Given the ongoing challenges in the higher education market, which has impacted Pearson’s profits, we wonder why they are selling now.’

Category: International news