KKR Buys Simon & Schuster for $1.62 Billion

US private equity firm KKR is to buy Simon & Schuster from Paramount Global for $1.62bn (£1.27bn) in an all-cash transaction.  The deal brings to an end months of speculation and in the words of S&S CEO Jonathan Karp will allow the publisher to “collaborate 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.”

Bob Bakish, President and CEO of Paramount Global said: “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.  The proceeds will give Paramount additional financial flexibility and greater ability to create long-term value for shareholders, while also delivering our balance sheet.”

Karp is positive about the deal.  “All of the executives at Simon & Schuster who met with KKR came away from those conversations impressed with the depth of KKR’s interest in our business and their commitment to helping us grow, thrive and become an even stronger company.”

KKR intends “to support numerous growth initiatives, including extending Simon & Schuster’s strong domestic publishing programme across various genres and categories, expanding its distribution relationships and accelerating growth in international markets”. 

KKR said it would “support Simon & Schuster in creating a broad-based equity ownership programme to provide all of the company’s more than 1,600 employees the opportunity to participate in the benefits of ownership after the transaction closes. Since 2011, KKR portfolio companies have awarded billions of dollars of total equity value to over 60,000 non-management employees across more than 30 companies”.

Ted Oberwager, partner at KKR, said: “Simon & Schuster’s nearly 100-year history is a testament to the enduring value of creative expression through the written and spoken word. We are happy to invest behind Jon and the immensely talented organisation at Simon & Schuster to support their mission of delivering marquee content to readers around the world.”

Richard Sarnoff, chairman of Media at KKR, and a previous executive vice-president and chief financial office at Random House, added: “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.

 “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.”

KKR was founded in 1976 by Jerome Kohlberg Jr and cousins Henry Kravis and George R Roberts all of whom had previously worked together at the investment bank Bear Stearns where they completed some of the earliest leveraged buy-out transactions.  KKR’s head office is in New York, but it has a number of international offices, including Dubai and Riyadh.