According to a Reuters exclusive report, Bertelsmann, the 53 percent owner of Penguin Random House, may be seeking an investor to take over the stake held by partner Pearson, should the latter choose to exit the partnership. This follows Pearson’s sale of the Financial Times and Economist amid a wholesale repositioning of its business towards education.
What impact, if any, this would have on Penguin Random House’s own strategy isn’t clear. Both Bertelsmann and Pearson are in transition mode, and both targeting education as a key revenue driver. Reuters notes that Bertelsmann CEO Thomas Rabe partnered with private equity giant Kohlberg Kravis Roberts in 2009 to help refurbish music business BMG. Any deal to move Pearson out of PRH would be similar. Pearson likewise sold the Economist Group to a consortium of Economist management and an Italian investment fund.
Private equity can often act as a midwife in restructuring processes, and this might involve major reshuffling or refurbishment of PRH units post any investment. Private equity also seeks to enhance income and performance in any business it invests in, prior to either listing or selling it. Any private equity shareholder in PRH therefore might also push the business to grow and deliver more revenue.
As yet, though, the only further comments on hand are from Pearson, via Reuters, stating that any sale of its PRH stake would most likely happen in 2017. And it’s very unclear whether Bertelsmann‘s moves are pure contingency planning, or herald an actual deal or series of deals.