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BW Businessworld

Pearson Eyes Penguin And RH Merger

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British education and publishing group Pearson Plc said it was in talks with Germany's Bertelsmann to combine their publishing divisions, Penguin and Random House. Pearson, which owns the Financial Times (FT), said on 25 October the two companies had not yet reached an agreement and there was no certainty that the talks would lead to a deal. Earlier on 25 October, a report by the FT said Bertelsmann would have a stake of over 50 per cent in the combined venture, citing three people familiar with the negotiations.
Bertelsmann, Europe's biggest media group and owner of European TV broadcaster RTL Group, is in the middle of an overhaul in an attempt to catch up with rapid changing markets. Lead by Chief Executive Thomas Rabe, who was appointed last year, the company is targeting major acquisitions and strategic partnerships to accelerate growth in Brazil, China and India, and to strengthen its position in the US. A Bertelsmann spokesman said he had nothing to add to Pearson's statement.
Earlier this month Pearson Chief Executive Marjorie Scardino said she would step down after 16 years, departing earlier than expected in a move that some analysts said could clear the way for the group to sell the FT. Analysts have said Pearson's new chief John Fallon, with his non-publishing background, could be willing to sell the FT and Penguin Books, as neither fully fit with the education division which became the dominant force under Scardino. The books market has changed rapidly with the emergence of the fast-growing ebook business, while competition has also increased with supermarkets competing for sales.