Paramount Global officially dropped a plan Monday to sell its Simon & Schuster division to rival publisher Penguin Random House after a US judge blocked the $2.2 billion deal on antitrust grounds.
Paramount, formally known as ViacomCBS, said the transaction was “terminated” following the Oct. 31 U.S. court ruling against the deal.
Penguin Random House, a subsidiary of Germany’s Bertelsmann Group, must pay a $200 million termination fee, Paramount said.
The company indicated it still plans to divest the unit, calling it “a non-core asset”.
“Simon & Schuster is a very valuable company with a recent record of strong performance; however, it is not video-based and therefore does not strategically fit into Paramount’s broader portfolio,” the statement said.
In challenging the deal, the U.S. Justice Department had argued that allowing Penguin Random House, the world’s largest book publisher, to buy a major competitor would allow it to “exert excessive influence over which books are published in the United States and how much authors are paid for their work.”
Bertlesmann had argued that the argument was based on an “inaccurate” reading of the market and that the merger would have been good for competition.
U.S. District Court Judge Florence Pan concluded that the government had shown that the merger would significantly reduce competition “in the market for the U.S. publishing rights for anticipated best-selling books.”
The German company confirmed in a statement Monday that it had reversed an earlier plan to appeal the US court’s ruling.
But the company said it remained confident in the growth of its book publishing business.
“Penguin Random House is part of the Global Content Strategy, one of our five strategic priorities,” said Bertelsmann Chief Executive Thomas Rabe. “Bertelsmann plans to achieve annual growth of five to ten percent in this area — organically, but also through acquisitions.”
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