Pearson eyes publishing arm merger with Bertelsmann

LONDON/FRANKFURT Thu Oct 25, 2012 1:23pm EDT

LONDON/FRANKFURT (Reuters) - British education and publishing group Pearson Plc said it was in talks with Germany's Bertelsmann to combine their publishing divisions, Penguin and Random House.

Pearson, which owns the Financial Times (FT), said on Thursday the two companies had not yet reached an agreement and there was no certainty that the talks would lead to a deal.

Earlier on Thursday, a report by the FT said Bertelsmann would have a stake of over 50 percent in the combined venture, citing three people familiar with the negotiations.

Bertelsmann, Europe's biggest media group and owner of European TV broadcaster RTL Group, is in the middle of an overhaul in an attempt to catch up with rapid changing markets.

Lead by Chief Executive Thomas Rabe, who was appointed last year, the company is targeting major acquisitions and strategic partnerships to accelerate growth in Brazil, China and India, and to strengthen its position in the United States.

A Bertelsmann spokesman said he had nothing to add to Pearson's statement.

Earlier this month Pearson Chief Executive Marjorie Scardino said she would step down after 16 years, departing earlier than expected in a move that some analysts said could clear the way for the group to sell the FT.

Analysts have said Pearson's new chief John Fallon, with his non-publishing background, could be willing to sell the FT and Penguin Books as neither fully fit with the education division which became the dominant force under Scardino.

The books market has changed rapidly with the emergence of the fast-growing ebook business, while competition has also increased with supermarkets competing for sales.

(Reporting by Neil Maidment in London and Harro Ten Wolde in Frankfurt; Editing by David Holmes)

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