KKR Set to Acquire Simon & Schuster in a $1.62 Billion Deal: A New Chapter in Publishing

In a significant development in the publishing world, KKR, a leading global investment firm, has declared its intent to acquire Simon & Schuster (S&S) from Paramount. Publisher’s Weekly is reporting the deal, valued at a whopping $1.62 billion, is an all-cash transaction and is currently awaiting regulatory approval. Once the acquisition is finalized, S&S will operate as a standalone private entity, with Jonathan Karp continuing his role as President and CEO, and Dennis Eulau as COO and CFO.

KKR’s commitment to fostering growth and strengthening S&S was well received by the latter’s executives. Karp, in a statement, expressed his optimism about the partnership, stating that KKR’s support would enable them to devise new strategies to enhance their offerings to readers and provide authors with superior publication opportunities.

In a candid conversation with Publisher’s Weekly, Karp revealed that this was the outcome he had been hoping for. He had previously expressed a preference for a financial buyer who could match the top bid, believing that such an outcome would be beneficial for S&S employees and the broader book publishing ecosystem. KKR seems to fit this bill perfectly.

KKR’s plans for S&S extend beyond just making it a standalone entity. They intend to invest in various areas to bolster S&S’s domestic publishing program across diverse genres and categories, expand distribution relationships, and accelerate growth in international markets.

In a letter to the staff, Karp shared that S&S executives had been in talks with KKR since spring 2023. He praised KKR’s acumen and their team’s desire to help S&S grow and thrive. He also highlighted KKR’s commitment to S&S employees, revealing plans for an equity ownership program that would allow all employees to participate in the benefits of ownership post-acquisition.

KKR has been a pioneer in advocating for employee ownership stakes and has pledged to make this a key component of its future investments. Karp also shared his personal admiration for Richard Sarnoff, a member of the KKR team, who was previously the Executive Vice President and Chief Financial Officer at Random House.

Paramount CEO Bob Bakish expressed his satisfaction with the transaction, calling it a crucial step in their deleveraging plan. CFO Naveen Chopra stated that the long-running spinoff of S&S would yield approximately $2.2 billion of gross proceeds to the company, including the $1.62 billion sale price, the $200 million fee paid by Penguin Random House when their purchase was blocked, and S&S’s profits during the sale period. However, they expect net proceeds from the sale to be around $1.3 billion, which will be used to pay down debt.

Richard Sarnoff, KKR’s chair of media, sees a compelling opportunity to help S&S become an even stronger partner to literary talent. He believes that creating an ownership culture within one of the world’s top publishers has enormous potential to create value for all of S&S’s stakeholders.

The investment from KKR is primarily coming from its North America Fund XIII, a $19 billion fund that closed in 2022. The closing date for the transaction has not been announced yet, as it is subject to closing conditions, including regulatory approvals.