UPDATED with sale announced: Paramount Global has inked a deal to sell publisher Simon & Schuster to private investment giant KKR, the media conglom said this afternoon as it reported second-quarter earnings.
“We are pleased to have reached an agreement on a transaction that delivers excellent value to Paramount shareholders while also positioning Simon & Schuster for its next phase of growth with KKR,” said Bob Bakish, Paramount Global CEO. “The proceeds will give Paramount additional financial flexibility and greater ability to create long-term value for shareholders, while also delevering our balance sheet.”
Bakish is currently talking with analysts on a post-earnings conference call, more details to come.
The company said that ffter 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.
“All of the executives at Simon & Schuster who met with KKR came away from those conversations impressed with the depth of KKR’s interest in our business and their commitment to helping us grow, thrive and become an even stronger company,” said Jonathan Karp. “With KKR’s support, we look forward to collaborating on new strategies that will enhance our ability to provide readers a great array of books and to give authors the best possible publication they can receive.”
Simon & Schuster has more than 36,000 titles across adult, children, audio and international categories.
PREVIOUSLY: Paramount Global is close to announcing a sale of its publisher Simon & Schuster to private investment giant KKR, according to a person familiar with the situation. Timing is always fluid but a deal could be announced as early as today. Paramount will report second-quarter earnings this afternoon.
It’s the second deal for the storied publisher. A previous agreement to sell the book publisher to Bertelsmann’s Penguin Random House was blocked by U.S. regulators last year for being anti-competitive — a ruling that was upheld by a federal judge. A transaction with KKR wouldn’t face the same hurdles. HarperCollins, which is owned by Rupert Murdoch’s News Corp., was also a suitor.
The price negotiated with KKR is said to be around $1.62 billion, less than the first was worth, at $2.2 billion. The gap is offset in part by a $200 million termination fee Paramount collected from Bertelsmann when their deal collapsed, as well as accumulated earnings from Simon & Schuster over the past few years.
The media company has been divesting non-strategic assets and real estate as it pivoted to streaming, looking for fresh cash to direct to its core film and television business. It has also been also entertaining offers for a stake in BET. A deal for the publisher, whose authors include Stephen King, will be one of its biggest transactions, one that Wall Street has been waiting for.
CFO Naveen Chopra said at a media conference in June that Paramount was “deep into the marketing process” for Simon & Schuster and could see a path to closing a deal this year. He said it would be “a sizable transaction” and the process was “very competitive,” with strong interest from strategic and financial buyers.
KKR has $510 billion in assets under management.
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