Random House and Penguin in Merger Talks

Posted on October 25, 2012

The Financial Times reports that Pearson (which owns the Financial Times) and Bertelsmann are in talks to merge Random House and Penguin. The talks are a result of the changing ebook market. FT says that Bertelsmann would own more than 50% of the merged company, although the negotiations are in the very early stages.

Pearson issued this statement when asked about the deal, "Pearson confirms that it is discussing with Bertelsmann a possible combination of Penguin and Random House. The two companies have not reached agreement and there is no certainty that the discussions will lead to a transaction. "Bertelsmann's executives have refused comment.

The goal of the proposed merger is to give the companies global reach for the growing ebook and digital market. Sources tell the FT that if the deal goes through Markus Dohle, the CEO of Random House, and John Makinson, the CEO of Penguin, would both remain with the company, although it's not clear exactly how that would work. The deal would also trigger regulatory scrutiny, especially in light of the justice department's lawsuit against major publishers over ebook price fixing.

Question: if the merger goes through, what should the new company be called? Random Penguin? Penguin House?