Acquisition of Simon and Schuster: French groups are not holding the rope

Posted on Nov 18, 2020 at 6:30 p.m.

The bidding for the sale by ViacomCBS of Simon and Schuster is going up and it seems that the French groups Lagardère and Vivendi vying for this publisher are not holding the rope against the German Bertelsmann – and its subsidiary Penguin Random House – or, as the ‘revealed “Publisher’s Weekly”, News Corp, Rupert Murdoch’s company, owner of publisher HarperCollins . According to the “Financial Times” , the match for Simon and Schuster would be played mainly between these industrialists, even if Bertelsmann would be supported by the private equity group Atairos.

The media giant, which also owns Paramount studios, the Showtime channel and MTV, is reportedly awaiting final offers for its publisher this week and has set a floor price of $ 1.7 billion. ViacomCBS would like to complete the operation quickly enough to refocus on streaming.

Lack of cash or synergies

Arnaud Lagardère had recently implicitly confirmed that his eponymous group, owner among others of Hachette, did not have the means to afford Simon and Schuster. Given the economic difficulties of its travel retail activity (trade in transport locations), a buyout of Simon and Schuster seemed unrealistic to many financial analysts. If the French group would have completely given up on going alone, some evoke the possible support of partners or investment funds.

A rare asset

Vivendi has ample financial means to afford Simon and Schuster. Already present in publishing in France since the acquisition of Editis, the group could thus develop its presence in the American market by seizing a good asset with a market share of 10%, against 20% for Penguin Random House, and between 4% and 6% for HarperCollins and Hachette. As the French group controlled by the Bolloré family is not present in publishing in the United States, such an external growth operation would not generate any synergies. And even if some speculate on the fact that Vivendi, which has become a shareholder of Lagardère, could seek to recover part of the assets of its “publishing” branch (and in particular the international activities of Hachette), nothing has come of the way. instant materialize the rumor. It is therefore difficult for the moment to follow other potential buyers in an auction. Vivendi and Lagardère declined to comment on this information.

If the auctions are racing for Simon and Schuster, with turnover of 814 million dollars in 2019, it is because the sector is in a phase of concentration to resist Amazon and bookstore chains like Barnes and Noble and that targets of this size are rare.

The latest major transaction in the industry is Pearson’s sale of Penguin to Bertelsmann and its subsidiary Random House, which was completed in stages from 2012. Previously, Lagardère had acquired Times Warner Book in 2006 for $ 538 million (450 million euros at the time). The markets today are talking about the sale of the non-educational portion – just over $ 100 million in revenue – from Houghton Mifflin, a publisher Vivendi sold in 2003.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.