KKR to acquire Simon & Schuster for $1.62 billion

KKR has agreed to buy Simon & Schuster from Paramount for $1.62 billion in an all-cash deal, the company announced Monday.

Why it matters: One of the country's biggest book publishers will soon be under private equity ownership, after a previous deal with Penguin Random House was blocked over antitrust concerns.

Details: Simon & Schuster, which publishes and distributes more than 36,000 titles and has more than 1,600 employees, will operate as a standalone company. KKR said it will create an equity ownership program for employees after the deal closes.

• President and CEO Jonathan Karp and COO and CFO Dennis Eulau will continue to lead the company.
• The deal was announced after markets closed Monday as Paramount reported its quarterly earnings.
• LionTree served as a financial adviser and Shearman & Sterling LLP as legal adviser to Paramount. Simpson Thacher & Bartlett LLP served as legal adviser to KKR.

Of note: KKR has some experience in publishing. The firm acquired audiobook publisher RBmedia from Shamrock Capital in 2018. It announced plans to sell RBmedia to H.I.G. Capital last month. KKR also acquired OverDrive, a digital reading platform for libraries and schools, in 2020.

Flashback: Paramount (then ViacomCBS) announced in March 2020 its plan to sell Simon & Schuster since it considered the asset as non-essential to its core businesses of video entertainment.

• Penguin Random House agreed in November 2020 to buy the publishing house. But a year later, the Department of Justice filed a suit to prevent the sale. A federal judge blocked the deal last October after a three-weeklong trial.
• Paramount dropped the sale last November and collected a termination fee of $200 million. It restarted the sale process earlier this year.

What they're saying: "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 CEO Bob 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 delevering our balance sheet."

• "With KKR's support, we look forward to collaborating on new strategies that will enhance our ability to provide readers a great array of books and to give authors the best possible publication they can receive," Karp said in a statement.

What we're watching: Paramount also has been looking to sell a majority stake in BET Group.