ViacomCBS announced on Wednesday that it will sell the famous Simon & Schuster publisher to Penguin Random House’s parent company Bertelsmann for $ 2.175 billion in cash.
ViacomCBS called the transaction “the result of a highly competitive auction that attracted the interest of buyers around the world and reflected Simon & Schuster’s position as a global publisher with some of the world’s most famous books.”
Bertelsmann said in a separate announcement that Simon & Schuster will continue to operate as a separate publishing unit under the umbrella of the Penguin Random House, with CEO Jonathan Karp and COO / CFO Dennis Eulau remaining at the helm.
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The transaction is expected to close in 2021, subject to regulatory approval. The merger would create a global book publishing powerhouse. Bertelsmann has agreed to take all necessary steps to obtain regulatory approvals, including a termination fee payable to ViacomCBS if the transaction does not close for regulatory reasons.
As . reported last week, bids were due before Thanksgiving. News Corp.’s French publisher HarperCollins and Vivendi, who also have significant publishing resources, were also in the running.
The sale follows a strategic review of non-core assets that ViacomCBS began in 2020. The proceeds from the transaction will be used to invest in ViacomCBS’s strategic growth priorities, including streaming, as well as to fund dividends and pay off debt, ViacomCBS said.
Simon & Schuster has more than 30 publishers for adults, children, audio and international. The bestselling author portfolio includes Stephen King, Doris Kearns Goodwin, and Jason Reynolds, and has an extensive backlist of perennial favorites like Catch-22 and The 7 Habits of Highly Effective People.
The price was above the original expectations of some on Wall Street. A purchase price of $ 2.175 billion implies roughly 15 times the LTM OIBDA multiple, which is cheap compared to comparable transaction multiples for public companies and subtotals. (An LTM OIBDA multiple is a valuation metric that shows earnings before interest, taxes, depreciation, and amortization for the past 12 months.)
ViacomCBS is committed to working closely with Penguin Random House to minimize disruptions for Simon & Schuster employees, authors and partners. Simon & Schuster will continue to be part of ViacomCBS until the contract is concluded.
LionTree Advisors is the financial advisor and Shearman & Sterling legal advisor to ViacomCBS on the transaction.
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