Penguin Merges With Random House

Bertelsmann and Pearson will be merging their respective publishing divisions, Random House and Penguin.

Marjorie Scardino, chief executive of Pearson, said:

“Together, the two publishers will be able to share a large part of their costs, to invest more for their author and reader constituencies and to be more adventurous in trying new models in this exciting, fast-moving world of digital books and digital readers.”

Earlier this month, Scardino announced that she would be stepping down from the company after 16 years at the end of this year.

Bertelsmann will control 53 percent of the merged publishers and will share executive oversight with Pearson. Random House’s Markus Dohle will become the chief executive, and Penguin’s John Makinson will serve as chairman.

Pearson and Bertelsmann said Monday that they expected the deal to close “in the second half of 2013” following regulatory approval. Bertelsmann would appoint five members of a nine-member board of directors; Pearson would appoint four.

The two companies also said “the combined organization’s level of organic investment in authors and new product models will exceed the total investment of Penguin and Random House as independent publishing houses.”

News Corp’s publishing division, HarperCollins, was considering a $1.5 billion bid for Penguin, but Penguin authors and agents were “terrified” of a News Corp takeover, according to a publishing agent.

Martin Hickman, who co-wrote Dial M for Murdoch, said a News Corp takeover would have been “nightmarish.”

“Penguin have a great reputation. They are a publisher with integrity and a wider social mission, so they are not the most nakedly aggressive publisher out there. But with HarperCollins, their virtues would be lost,” Hickman said.

Random House is the largest trade publisher in the English-language world; Penguin is among the fourth largest of six global publishers. While Random House is strong in the United States and Britain, Penguin is the world’s most famous publishing brand.