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Reactions to KKR's Acquisition of Simon & Schuster
The big news in book publishing right now is the sale of Simon & Schuster to private equity firm KKR for $1.62 billion. KKR also owns OverDrive. Here are some of the many news articles about the acquisition.
The Guardian: “Simon & Schuster Sold to Private Equity Firm KKR for $1.62bn”
Late in 2020, Paramount had announced the sale of Simon & Schuster to Penguin Random House …, a deal that would have made the new company by far the biggest in the US. But the Department of Justice, which under the Biden administration has taken a tougher stance on mergers compared to other recent presidencies, sued to block the sale in 2021.
After a three-week trial in the summer of 2022, … US district judge Florence Y Pan ruled in the government’s favor, saying the [Department of Justice] had made ‘a compelling case that predicts substantial harm to competition’.
Book Riot: “Simon and Schuster Is Being Sold to a Private Equity Firm for $1.6 Billion”
After a Federal Court blocked Penguin Random House’s [PRH] acquisition of Simon and Schuster over antitrust concerns, the 99-year-old publishing company was put back up for sale by Paramount. Now, it’s being sold to the private equity firm KKR for $1.62 billion. The original sale to PRH was for $2.2 billion.
The Conversation: “The Sale of Publisher Simon & Schuster Is Good News for Staff and Authors, but the Long-Term Implications Are Uncertain”
This must be a huge relief for staff and authors. It brings to an end Paramount Global’s three-year search for a new owner for the publisher, which was no longer seen as a core business for the multinational media and entertainment conglomerate. …
The New York-based publisher also comes with considerable cultural caché. Founded in 1924 by Richard L. Simon and M. Lincoln Schuster, the company is the fourth largest publisher in the United States.
Publishers Weekly: “KKR Wins S&S for $1.62 Billion”
$1.62 billion is a healthy price since most trade publishers sell for not much better than 1.5 times sales, and [Simon & Schuster]’s 2022 revenue was $1.18 billion. …
A private equity firm’s acquisition will be viewed negatively by many who will be concerned that KKR will put profits over literature. Others, however, will see KKR’s as better than [Simon & Schuster] being bought by one of its competitors.
CNBC: “Paramount to Sell Simon & Schuster to KKR for $1.62 billion; Media Giant’s Earnings Top Estimates”
Paramount’s stock was up nearly 4% in after-hours trading [after the announcement].
Paramount executives said during [Aug. 7’s] earnings call that the proceeds of the Simon & Schuster sale would be used in the company’s ongoing effort to pay down debt.
For more on Paramount’s approach to selling Simon & Schuster, see NPR’s “Paramount Sells Simon & Schuster to Private Investment Firm” and “Paramount to Sell Simon & Schuster to KKR for $1.62 bln” from Reuters.
The Hollywood Reporter: “After Blocked Deal, Paramount Sells Simon & Schuster to Private Equity Firm KKR for $1.62B”
In opting to sell to a buyer not affiliated with the ‘Big Five’ group of publishers—which includes prior suitor Penguin Random House along with HarperCollins, Hachette Book Group and Macmillan—Paramount appears to think this is the deal that can finally clear regulatory approval.
The New York Times: “Paramount Agrees to Sell Simon & Schuster to KKR, a Private Equity Firm”
The deal … will put control of the cultural touchstone behind authors like Stephen King and Bob Woodward in the hands of a financial buyer with an expanding presence in the publishing industry.
While private equity investors have had a significant footprint in the book business—different firms have owned literary agencies, publishing houses and the retailer Barnes & Noble—the acquisition of one of the largest publishers in the country vastly increases the hold of financial interests in the business.
For more on how a private equity firm owning a publishing company may affect its business, see “Simon & Schuster CEO Says There’s No Need to Be ‘Nervous’ About New Owner KKR” in the Los Angeles Times and the previously mentioned Publishers Weekly piece.
Deadline: “It’s Official: Paramount Global Sells Simon & Schuster to KKR for $1.62 Billion in Cash”
The company said that [after] the closing of the transaction, Simon & Schuster will become a standalone private company and will continue to be led by Jonathan Karp, President and CEO and Dennis Eulau, COO and CFO of Simon & Schuster.
Variety: “Paramount Global, KKR Sign $1.6 Billion Deal for Simon & Schuster”
KKR said it intended to extend Simon & Schuster’s domestic publishing program across various genres and categories, expand its distribution and spur growth in international markets. Employees will be given a chance to take part in an equity ownership program.
Publishing Perspectives: “KKR Agrees to Buy Simon & Schuster for $1.62 Billion”
[According to a statement,] ‘KKR will also support Simon & Schuster in creating a broad-based equity ownership program to provide all of the company’s more than 1,600 employees the opportunity to participate in the benefits of ownership after the transaction closes. Since 2011, KKR portfolio companies have awarded billions of dollars of total equity value to more than 60,000 non-management employees across more than 30 companies.’
For more on what employees can expect, see the previously mentioned article in The Conversation.
Associated Press: “Simon & Schuster Purchased by Private Equity Firm KKR for $1.62 Billion”
Simon & Schuster has had strong sales over the past two years, even as the book market has cooled off. The publisher has scheduled some of the most anticipated fall releases, including Britney Spears’ memoir ‘The Woman In Me’ and Walter Isaacson’s biography of Elon Musk.
For a good quick-read summary of the sale, see Axios’ “KKR to Acquire Simon & Schuster for $1.62 Billion.”
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