Bertelsmann could seek to increase its stake in Penguin Random House from next year, it has been reported.
Sources told Bloomberg that Bertelsmann, which owns 53% of the publisher, plans to acquire all or part of Pearson’s 47% stake in the company.
Bloomberg reported that while “Bertelsmann and Pearson aren’t in talks, Pearson is willing to sell and can do so starting October 2015 under a shareholder agreement”, according to its sources.
Bloomberg calculated that PRH could be valued at €2.3b.
Pearson has declined to comment. A Bertelsmann spokesperson told The Bookseller: "We are very pleased with the first fifteen months of our partnership and will continue our integration course – anything else is speculation."
He added that the "rough structure of the deal" meant that: "Contractual agreements stipulate that neither Pearson nor Bertelsmann may sell shares in Penguin Random House in the first three years. After three years, each side may sell shares; its partner has right of first refusal. As of October 2015, and at specified intervals thereafter, Pearson has the right to call on Bertelsmann to take over all of Pearson’s shares in Penguin Random House. Should Bertelsmann choose not to acquire Pearson’s shares, Pearson has the right to initiate a re-capitalization of Penguin Random House, according to which Penguin Random House can borrow up to a certain amount, which is then distributed pro rata between the partners. Also, after five years, either of the two partners can demand an IPO of Penguin Random House."
Penguin Random House worldwide generated revenues of €1.5bn (£1.2bn) in the six months to June 2014, according to Bertelsmann’s first half year results.
Bertelsmann did not break results into regions but said the publisher's global revenues were up 63% from the total of $915m (£712m) generated by Random House in the same period the year before, ahead of the merger with Penguin on 1st July 2013.
In its accounts for 2013, Pearson reported that profits were down 9% to £736m on underlying basis after net restructuring charges. It blamed the plunge in profit on fewer people enrolling in higher education in its core US market, the impact of curriculum changes in both the US and the UK and the £135m in restructuring charges during the year due to the accounting impact of the Penguin Random House merger and other restructuring costs.
Yesterday (6th October) Bertelsmann acquired full ownership of magazine and digital content publisher Gruner + Jahr , after buying the 25.1% stake previously owned by Jahr Holding. The purchase price of the buy, which will become effective on 1st November, is not being disclosed.