Paramount Global, the parent company of Penguin Random House, backed out of a deal to merge with competing book publisher Simon & Schuster. File Photo by ActuaLitte/Flickr/Creative Commons
Nov. 22 (UPI) -- A deal that would have merged Simon & Schuster with Penguin Random House for more than $2 billion has collapsed following a judge's ruling three weeks ago that determined the deal violated antitrust laws.
Simon & Schuster's parent company, Paramount Global, backed out of the purchase on Monday, leaving Penguin with a $200 million tab required for terminating the deal.
A filing with the Securities and Exchange Commission revealed Paramount had second thoughts when it took a deeper look at its strategy for making the buy.
"Simon & Schuster is a highly valuable business with a recent record of strong performance; however, it is not video-based and therefore does not fit strategically within Paramount's broader portfolio," the document states.
The deal unraveled three weeks after a federal judge blocked the $2.2 billion purchase from moving forward, ruling the merger would violate antitrust laws. At the time, Penguin -- which is already the nation's largest publisher -- vowed to appeal the decision, while Paramount remained noncommittal about its next move.
The purchase agreement also expired this week after the parties failed to extend it in the wake of the Oct. 31 ruling, meaning Penguin's hands are tied now and cannot appeal as it had planned to do previously.
Penguin Random House issued a statement Monday, saying the company "remains convinced that it is the best home for Simon & Schuster's employees and authors."
"We believe the judge's ruling is wrong and planned to appeal the decision, confident we could make a compelling and persuasive argument to reverse the lower court ruling on appeal," the company said. "However, we have to accept Paramount's decision not to move forward. We want to thank our Penguin Random House employees and the teams at Simon & Schuster for their support."
The court had ruled that the effects of the acquisition would lessen competition in the market for U.S. publishing rights to anticipated top-selling books, federal prosecutors said.
The merger was announced in November 2020 with ViacomCBS agreeing to sell publisher Simon & Schuster to Penguin Random House for $2.175 billion.
A year later, the Justice Department sued, stating the deal would permit Penguin Random House to "exert outsized influence over which books are published in the United States and how much authors are paid for their work."
Best-selling author Stephen King testified on behalf of the Justice Department during the 13-day trial in August, saying the deal would kill competition over authors selling books as it would create an environment akin to a husband and a wife bidding against each other for a house.
"It's a bit ridiculous," he said.