Paramount Global is abandoning plans to sell book Simon & Schuster to Penguin Random House, putting the book-publishing giant back on the market for another suitor, according to a securities filing.
The $2.175 billion deal was blocked on Oct. 31 when a federal judge found that combining two of the world’s largest book publishers violates antitrust law. In the wake of the ruling, Penguin Random House vowed to appeal but Paramount remained noncommittal.
Paramount on Monday said it killed plans for the deal and is entitled to $200 million termination fee from Penguin Random House. It called Simon & Schuster a “non-core asset” to the company.
“Simon & Schuster is a highly valuable business with a recent record of strong performance; however, it is not video-based and therefore does not fit strategically within Paramount’s broader portfolio,” states the Securities and Exchange Commission filing.
Penguin Random House said in a statement that it “remains convinced that it is the best home for Simon & Schuster’s employees and authors.”
“We believe the judge’s ruling is wrong and planned to appeal the decision, confident we could make a compelling and persuasive argument to reverse the lower court ruling on appeal,” it said. “However, we have to accept Paramount’s decision not to move forward. We want to thank our Penguin Random House employees and the teams at Simon & Schuster for their support.”
The case brought by the Justice Department argued that the deal would harm competition to acquire the publishing rights to top-selling books, resulting in lower advances and less favorable contract terms for authors. Penguin Random House has a 37 percent share of the market, while Simon & Schuster has 11 percent, according to court filings in the case.
“The government has presented a compelling case that predicts substantial harm to competition as a result of the proposed merger,” wrote U.S. District Judge Florence Pan in the ruling. “The post-merger concentration of the relevant market would be concerningly high: The merged entity would have a 49% market share, more than twice that of its closest competitor.”
Paramount and Simon & Schuster didn’t immediately respond to requests for comment.