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US competition authorities prohibit deal: Bertelsmann fails with multi-billion takeover

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The multi-billion takeover of the US book publisher Simon & Schuster by the German Bertelsmann group has finally failed. Late Monday evening in Gütersloh, Bertelsmann announced that after talks with Simon & Schuster shareholder Paramount Global, the original plan to challenge the judgment of a US court that had prohibited the purchase for antitrust reasons was no longer being pursued. Paramount confirmed in a stock release that the deal is off the table.

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The US government’s competition watchdogs had prevailed in court with a lawsuit against the takeover, which cost around 2.18 billion US dollars (2.13 billion euros). Bertelsmann initially planned to appeal. However, according to US media reports, Paramount did not support this project.

Instead, the company announced late Monday evening that it had terminated the takeover agreement. However, Paramount confirmed that Simon & Schuster did not fit the group and indicated that it would continue to look for a buyer.

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In November 2020, Bertelsmann announced its original plans. The Penguin Random House publishing group, which belongs to the portfolio, was actually supposed to take over the New York-based publisher Simon & Schuster, which has successful authors such as Stephen King, for more than two billion dollars. Bertelsmann expected the deal to be completed in 2021. With the acquisition, the group wanted to expand its position in the USA. Bertelsmann is already the sole owner of Penguin Random House in New York.

Bertelsmann and Paramount agreed on a severance payment in the event of failure

The US government had argued in its lawsuit that the takeover would lead to too much market power and harm competition too much. Penguin Random House is already the largest book publisher in the world, and with the acquisition of one of the largest competitors, its influence on the US market is becoming too great. The competent US Federal District Court in Washington sided with the antitrust authorities and prohibited the acquisition at the end of October.

After the failure of the takeover, von Bertelsmann in Gütersloh went on to say that Penguin Random House would grow significantly in the coming years, both on its own and through acquisitions. The media, service and education group assured that the growth of its own global book publishing business would be promoted.

The collapsed deal is another setback for Bertelsmann. It was only in September that the RTL Group, which belongs to the group, rejected the plan to merge two private TV groups in France. The background was official requirements. Competition examiners had previously expressed concerns.

According to Paramount Global, the failed sale of Simon & Schuster is likely to cost the Bertelsmann group dearly. In its mandatory notification to the SEC, the US media group said on Monday that Penguin Random House had agreed to pay $200 million in compensation to Paramount if the transaction collapsed. (dpa)

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Source: Tagesspiegel

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