ViacomCBS To Sell Simon & Schuster To Penguin Random House Parent Bertelsmann For Close To $2.2 Billion In Cash

ViacomCBS To Sell Simon & Schuster To Penguin Random House Parent Bertelsmann For Close To $2.2 Billion In Cash

ViacomCBS announced Wednesday it will sell the storied Simon & Schuster publisher to Penguin Random House house parent Bertelsmann for $2.175 billion in cash, a major infusion of funds as the Bob-Bakish run media company makes good on its promise to unload non-core assets.

ViacomCBS called the transaction “the outcome of a highly competitive auction that attracted interest from buyers around the world, reflecting Simon & Schuster’s position as a global publisher with some of the world’s best known books.”

Bertelsmann in a separate announcement said Simon & Schuster will continue to be managed as a separate publishing unit under the Penguin Random House umbrella with  CEO Jonathan Karp and COO/CFO Dennis Eulau, continuing at the helm.

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The deal 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 steps necessary to obtain regulatory approvals, including a termination fee payable to ViacomCBS if the transaction does not close for regulatory reasons.

As Deadline reported last week, bids were due before Thanksgiving. News Corp.’s publisher HarperCollins and Vivendi of France, which also owns significant publishing assets, had also been in the running.

The sale follows a strategic review of non-core assets ViacomCBS began in 2020. Proceeds from the transaction will be used to invest in ViacomCBS’s strategic growth priorities, including in streaming, as well as to fund the dividend and pay down debt, ViacomCBS said.

Simon & Schuster has more than 30 publishing units across adult, children, audio and international. Its portfolio of best-selling authors includes Stephen King, Doris Kearns Goodwin and Jason Reynolds, and it owns a rich backlist of perennial favorite titles such as Catch-22 and The 7 Habits of Highly Effective People.

The price tag was above initial expectations of some on Wall Street. A purchase price of $2.175 billion implies an approximate 15x LTM OIBDA multiple, which compares favorably with comparable public company and sum-of-the-parts transaction multiples. (An LTM OIBDA multiple is a valuation metric that shows earnings before interest, taxes, depreciation, and amortization adjustments for the last 12-month period.)

ViacomCBS said it is committed to working closely with Penguin Random House to minimize disruptions for Simon & Schuster employees, authors and partners, and Simon & Schuster will continue to be a part of ViacomCBS until the deal closes.

LionTree Advisors is the financial advisor and Shearman & Sterling legal advisor to ViacomCBS in the transaction.