KKR Signs $1.62B Deal to Buy Simon & Schuster from Paramount Global

Private equity giant KKR has reached an agreement to acquire book publisher Simon & Schuster from Paramount Global for $1.62 billion in an all-cash transaction.

Although less than the $2.18 billion that Penguin Random House had previously agreed to pay, $1.62 billion is a reasonable price given that most trade publishers sell for no more than 1.5x sales and S&S’s 2022 revenue was $1.18 billion.

Paramount CEO Bob Bakish said during its most recent earnings call that Paramount expects to “yield approximately $1.3 billion in net proceeds” from the sale, which the company said would be used to pay down debt.

Bakish stated that the $1.62 billion sale price plus the $200 million termination fee paid by Penguin Random House after last year’s deal was blocked by regulators, along with the cash flow gained from strong sales from S&S over the past year, means the company will “realize approximately $2.2 billion in gross proceeds” from the sale of S&S.

While private equity investors have had a substantial presence in the book industry — different firms have owned literary agencies, publishing houses, and Barnes & Noble — the acquisition of one of the country’s largest publishers significantly expands their financial stake in the industry.

S&S will continue to be led by CEO Jonathan Karp and Dennis Eulau as COO and CFO.

KKR is making its investment primarily through its North America Fund XIII.