Bertelsmann Buys 22% Stake in Penguin Random House From Pearson -- Update

By Zeke Turner and Olga Cotaga Features Dow Jones Newswires

Bertelsmann SE said Tuesday it is increasing its stake in book publisher Penguin Random House to 75%, giving it tighter control over the joint partnership with Pearson PLC.

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Pearson, the British education and publishing company, is selling a 22% stake in the venture to Bertelsmann for $1 billion.

Bertelsmann, the privately held German media titan, said the Penguin Random House's enterprise value for the deal had been set at $3.55 billion. The company's increased control will give it the right to name a chairman of the publisher's board, Bertelsmann said.

"The transaction is an attractive proposition economically, as theearnings attributable to Bertelsmann shareholders will increase by more than EUR60 million ($68.3 million)," said Bertelsmann Chief Executive Thomas Rabe.

Under the terms of Bertelsmann and Pearson's 2012 joint-venture agreement, the German company already had control of the CEO job, to which it appointed Bertelsmann insider Markus Dohle.

Pearson said separately it would distribute GBP300 million ($382.5 million) from the sale to shareholders through a share buyback program.

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It will retain a 25% in the business after the sale.

Pearson also said Tuesday it will pay future dividends "comfortably covered by the earnings," but excluding any contribution from Penguin Random House.

Previously, Pearson said it was planning to sell the entire 47% stake in U.S.-based Penguin Random House--one of the world's largest book publishers--to bolster its finances and invest in other parts of its business.

The sale is expected to close in September, Pearson said.

Write to Zeke Turner at Zeke.Turner@wsj.com and Olga Cotaga at Olga.Cotaga@wsj.com

(END) Dow Jones Newswires

July 11, 2017 03:09 ET (07:09 GMT)