LONDON--International media and education company Pearson PLC
(PSON.LN), and Bertelsmann Monday agreed to create a publishing
organization by combining publishing brands Penguin and Random
House.
MAIN FACTS:
-Under the terms of the agreement, Penguin and Random House will
combine their businesses in a newly-created joint venture named
Penguin Random House.
-Bertelsmann will own 53% of the joint venture and Pearson will
own 47%. The joint venture will exclude Bertelsmann's trade
publishing business in Germany and Pearson will retain rights to
use the Penguin brand in education markets worldwide.
-Bertelsmann will nominate five directors to the Board of
Penguin Random House and Pearson will nominate four. John Makinson,
currently chairman and chief executive of Penguin, will be chairman
of Penguin Random House and Markus Dohle, currently chief executive
of Random House, will be its chief executive.
-The combination is subject to customary regulatory and other
approvals, including merger control clearances, and is expected to
complete in the second half of 2013.
-Under the terms of the agreement, neither Pearson nor
Bertelsmann may sell any part of their shareholding in Penguin
Random House for three years.
-To protect Pearson's interests as a minority shareholder, if
Bertelsmann declines a Pearson offer to sell its entire
shareholding, Pearson may require a recapitalization by which
Penguin Random House raises debt of up to 3.5x Ebitda, with a
dividend distributed to shareholders in line with their
ownership.
-In addition, from five years after completion, either partner
may require an IPO of Penguin Random House.
-Shares closed Friday at 1221 pence valuing the company at
GBP9.98 billion.
-Write to Razak Musah Baba at razak.baba@dowjones.com
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