Penguin Random House, Simon & Schuster will not go through with $2.2B merger deal
The Justice Department had filed a lawsuit in November 2021 to stop Penguin Random House and Simon & Schuster from merging
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Book publisher Penguin Random House has scrapped plans to merge with competitor Simon & Schuster following a court's decision to block the $2.2 billion deal.
A judge ruled that Penguin Random House's bid to acquire Simon & Schuster was illegal because the merger would impact authors' pay.
The Justice Department had filed a lawsuit in November 2021 in the hopes of stopping the deal from going through.
Penguin Random House owner Bertelsmann initially said it would appeal the decision, but the German media group said in a statement Monday that it "will advance the growth of its global book publishing business without the previously planned merger of Penguin Random House and Simon & Schuster."
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Book publisher Penguin Random House has scrapped plans to merge with competitor Simon & Schuster following a court's decision to block the deal. (Justin Sullivan/Getty Images / Getty Images)
This comes after Bertelsmann failed to convince Simon & Schuster’s owner Paramount Global to extend their deal agreement and appeal the judge's decision.
Judge Florence Pan of the U.S. District Court for the District of Columbia ruled on October 31 that the Justice Department had proved the deal could significantly negate competition "in the market for the U.S. publishing rights to anticipated top-selling books."
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A judge ruled that Penguin Random House's bid to acquire Simon & Schuster was illegal because the merger would impact authors' pay. (AP Photo/Jenny Kane, File / AP Newsroom)
The Biden administration had argued for the deal to be blocked because it would result in less competition for blockbuster books and lower advances for authors who earn $250,000 or more.
The administration claimed in August hearings that the five largest publishers control 90% of the market and that Penguin Random House and Simon & Schuster would control nearly half of the market for publishing rights to blockbuster books if they merged. The nearest competitors, the government said, would be less than half the size.
The Justice Department had filed a lawsuit in November 2021 in the hopes of stopping the deal from going through. (Beata Zawrzel/NurPhoto via Getty Images / Getty Images)
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The top five publishers are Penguin Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette.
Penguin Random House will now pay a $200 million termination fee to Paramount Global.
Reuters contributed to this report.