Just days after the initial rumours surfaced, Penguin and Random House have confirmed that they are to merge. The deal will leave Random House owner Bertelsmann owning 53% of the new group, with the remaining 47% owned by Penguin’s owner Pearson. Although the deal will create a massive new power in the publishing industry, most analysts believe regulators will accept the merger.
There were reports over the weekend that News Corp might be prepared to make a $1bn bid to buy up Penguin. News Corp already owns HarperCollins, and there were suggestions that a bidding war could ensue. For whatever reason, the mooted News Corp bid appears not to have been taken forward.
The deal between Penguin and Random House is a clear sign of the industry moving towards consolidation as companies struggle to plot a confident course through the evolving ebook market. Some see the deal as a strengthening of the companies, while others might be tempted to argue that publishers need to become slimmer, not bigger, in order to compete.