Penguin and Random House Merger

Penguin and Random House have announced merger plans. A successful merger will make the new company the largest book publisher in the world. Board members feel that this is a necessary step to take to allow them to compete with the mighty Amazon.

The merger of Penguin and Random House will mean that they will control around 27% of the paper book market. As well as dominating the book market, Amazon also dominate the electronic book market. it is thought that am aggressive move into digital publishing will be announced by the new Penguin / Random House company in the near future.

Both companies are of a similar age and size. Penguin was founded in 1935 in London, Random House in 1925 in New York. They both have 15 offices. Penguin employs fewer people, with 3500 staff compared to Random House’s 5300. Penguin sells around 110 million books a year with a revenue of £1 billion, whereas Random House sells around 400 million books a year (some of which are audio and digital books) with a revenue of £1.5 billion (2011 figures).

Merger Approval

Penguin is owned by parent company Pearson, and Random House is owned by parent company Bertelsmann. Both companies are confident that regulators will approve the merger plans. Pearson will have to demerge some parts of its business to ensure that the merger can take place.

Both companies are hoping that the merger will be approved by the third quarter in 2013.

Reduced Costs

Both companies should see a significant reduction in costs following the merger, however, this is expected to also mean some job losses.

Penguin and Random House have an excellent portfolio and long history. Random House has recently experienced an upturn following the racy Fifty Shades of Grey books and Penguin continues to produce some very popular books, such as the Jamie Oliver cooking books.

Both houses will continue to publish under their original imprints. Penguin publishes some of its books under the name of Michael Joseph, while Random House publishes some books under the name Virago. These brands will remain.

Penguin Random House

The Penguin Random House HQ will be in New York with a major office in London. Both companies currently have 15 offices around the world. Many of these offices reside in the same cities and mergers of resources and staff is expected in these locations.

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