On Monday, Paramount Global announced it agreed to sell the infamous publishing giant Simon & Schuster to private equity firm KKR for an outstanding $1.65 billion dollars in all-cash deal.
KKR acquired all assets of Simon & Schuster as Paramount opted to sell to a buyer outside of the “Big Five” group of publishers including Penguin Random House, HarperCollins and Macmillan.
“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,” Paramount Chief Executive Bob M. Bakish said in a statement. “The proceeds will give Paramount additional financial flexibility and greater ability to create long-term value for shareholders, while also delivering our balance sheet.”
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The deal comes less than a year after a failed $2.2 billion-plus agreement went south last October with Penguin Random House.
“The Justice Department was concerned that the merger with Penguin Random House would reduce the number of competing purchasers of book manuscripts,” Professor Keith Hylton, an antitrust-law expert at the Boston University School of Law said. “Selling to a private-equity firm won’t reduce the number of competitors.”
Today, we agreed to acquire @simonschuster from @paramountco. Read more about the transaction here:
— KKR (@KKR_Co) August 7, 2023
“We see a compelling opportunity to help Simon & Schuster become an even stronger partner to literary talent by investing in the expansion of the company’s capabilities and distribution networks,” stated Richard Sarnoff, chairman of media at KKR.
In a strategic move aimed at streamlining its asset holdings to bolster its entertainment portfolio, Paramount took significant steps over the past few years:
- In 2020, the company divested itself of the tech-oriented platform CNET, a transaction that netted them a sum of $500 million.
- The following year, Paramount continued its restructuring efforts, parting ways with CBS’ New York-based BlackRock headquarters building, which fetched an impressive $760 million.
- Additionally, the Studio City lot, another CBS property, was relinquished in 2021 for a substantial amount of $1.85 billion.
The announcement came as Paramount reported second-quarter earnings Monday. The company said it swung to a loss of $299 million from a profit of $419 million in the year-earlier period, while revenue fell 2.1% to $7.62 billion.
Asset manager KKR, which maintains health care, real estate, pharmaceutical and technology holdings, recently branched into the media space through investments in the Ari Emanuel-run Endeavor as well as Epic Games, Mediawan, Leonine Studios and Skydance Media. KKR has 150 billion in assets under its management.
According to Paramount, after closing, Simon & Schuster will become a stand-alone private company and will continue to be led by CEO Jonathan Karp.
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