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Bertelsmann to Buy Simon & Schuster for $2.1 Billion in Cash

Cynthia Littleton
·2-min read

German media giant Bertelsmann has set a deal with ViacomCBS to acquire publishing unit Simon & Schuster for $2.17 billion in cash.

Bertelsmann, owner of publishing giant Penguin Random House, was seen as a logical contender for Simon & Schuster. ViacomCBS announced its intent to sell the publishing arm earlier this year as part of the company’s post-merger streamlining to focus on content investment.

Simon & Schuster will operate as a separate unit under the Penguin Random House umbrella. Jonathan Karp, president-CEO of Simon & Schuster, and Dennis Eulau, chief operating officer and chief financial officer, will continue to lead the division. The deal is expected to close next year.

ViacomCBS said it would use the proceeds from the sale to pay down debt, fund its dividend and to invest in “strategic growth priorities.” ViacomCBS chief Bob Bakish in March told investors that Simon & Schuster had attracted interest from 25 bidders. Bertelsmann was believed to be the frontrunner from the start.

Simon & Schuster itself has more than 30 imprints for adult, children, audio and international publications. Top authors on the current roster include Stephen King, Doris Kearns Goodwin and Jason Reynolds. Most recently, Simon & Schuster has scored hits with two books focused on President Donald Trump: “Too Much and Never Enough,” penned by Mary Trump, the President’s niece; and “Rage,” by Bob Woodward.

The sale strengthens Bertelsmann’s already strong position in the book arena. ViacomCBS has been shedding assets for the past few years as the company realigns operations to invest more in content and global streaming platforms. The company is looking to sell CBS’ famed Black Rock headquarters in Manhattan as part of its debt-reduction plan.

Robert Thomson, CEO of Rupert Murdoch’s News Corp — which owns rival book publisher HarperCollins — blasted the sale of Simon & Schuster to Bertelsmann as anticompetitive. He claimed the deal would create a “literary leviathan” controlling 70% of the U.S. literary and general fiction market.

“There is clearly no market logic to a bid of that size — only anti-market logic,” Thomson said in a statement. “Bertelsmann is not just buying a book publisher, but buying market dominance as a book behemoth. Distributors, retailers, authors and readers would be paying for this proposed deal for a very long time to come… There will certainly be legal books written about this deal, though I wonder if Bertelsmann would publish them.”

ViacomCBS is carrying $19.7 billion in long-term debt as of Sept. 30, according to the company’s third-quarter earnings released earlier this month.

LionTree Advisors served as financial advisor and Shearman & Sterling LLP as legal advisor to ViacomCBS in the deal.

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