Paramount Global has entered an agreement to sell Simon & Schuster to investment firm KKR for $1.62 billion in an all-cash transaction.
“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’s president and 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.”
Upon the deal’s close, the book publisher will become a standalone private company run by its current chief executive officer Jonathan Karp and chief financial officer Dennis Eulau. Completion of the deal remains subject to customary closing conditions, including regulatory approvals.
Paramount expects the transaction to yield approximately $1.3 billion in net proceeds resulting in a roughly 0.5x improvement in net leverage. Proceeds from the sale will be used to help pay down Paramount’s debt.
KKR, the second-largest private equity firm in the country with more than $500 million in assets, is making its investment in Simon & Schuster primarily through its North America Fund XIII and has secured fully committed financing for the transaction. The deal builds on KKR’s investing in content-oriented media businesses, including Epic Games, Mediawan, Leonine Studios, Artlist, Skydance Media, BMG and RBmedia, among others.
In addition to investing in all areas necessary to establish Simon & Schuster as a standalone entity, KKR intends to support numerous growth initiatives, including extending its domestic publishing program across various genres and categories, expanding its distribution relationships and accelerating growth in international markets.
“We see a compelling opportunity to help Simon & Schuster become an even stronger partner to literary talent by investing in the expansion of the company’s capabilities and distribution networks across mediums and markets while maintaining its 99 year legacy of editorial independence,” KKR Media chairman Richard Sarnoff said. “We also believe the opportunity to create an ownership culture within one of the world’s top publishers has enormous potential to create value for all of Simon & Schuster’s stakeholders.”
The agreement comes after chief financial officer Naveen Chopra said in June that Paramount was “pretty deep into the remarketing process” for a potential sale of of the book publisher. A deal was initially closed to sell it to Bertelsmann’s Penguin Random House for $2.2 billion, but that was ultimately blocked following a lawsuit from the Department of Justice.
LionTree Advisors is acting as financial advisor and Shearman & Sterling LLP is acting as legal advisor to Paramount. Simpson Thacher & Bartlett LLP is acting as legal advisor to KKR.
The news coincided with Paramounts quarterly results for the second quarter of 2023. Paramount shares have climbed as much as 7% in after-hours trading on Monday following the announcement.
