Trade Publishers Focused on Strategic Deals In 2016

After a quiet 2015 with only modest mergers-and-acquisitions activity in the trade book market, deal making picked up last year. Four of the Big Five trade publishers were involved in transactions in 2016, the largest being the Hachette Book Group’s purchase of the publishing arm of the Perseus Books Group. The acquisition involved all nine of Perseus’s book imprints and added about $100 million in annual sales to HBG’s publishing program. Simultaneous with HBG’s purchase, Ingram bought the four groups that composed Perseus’s distribution business, making Ingram the distributor for 600 publishers. A similar deal was called off in August 2014.

Penguin Random House was involved in three deals during the year, but in all three PRH was the seller, not the buyer, divesting itself of noncore assets.

The first sale was officially completed Dec. 31, 2015, but announced in early January; it involved PRH’s self-publishing division, Author Solutions, which went to private equity firm Najafi Companies. Author Solutions was acquired by Penguin prior to its merger with Random House and was never a priority for the combined PRH.

A second substantial deal for PRH was the sale of Fodor’s, the company’s travel-publishing unit, to Internet Brands. Although PRH made significant investments to turn Fodor’s into a digital business, management felt that it had taken the unit as far as it could and that Fodor’s would do better in a more digital-centric company.

The third sale was of Random House Studios to Freemantle Media North America. Originally founded in 2007 as Random House Films, the goal of the division was to develop RH titles for movies and television, but the unit had met with only limited success.

Though PRH shed a self-publishing unit last year, Macmillan bought one, acquiring Pronoun in May. Founded as Vook, Pronoun is a self-publishing platform that, prior to the sale to Macmillan, had gone on its own mini acquisition spree during which it bought several digital startups.

The fourth member of the Big Five to make a purchase last year was Simon & Schuster, which bought Adams Media from F+W Media.

The biggest acquisition in the publishing field in 2016 was Follett’s purchase of Baker & Taylor, which further consolidated the wholesaling and distribution segment.

Several companies also made multiple acquisitions in the past year. The Quarto Publishing Group USA made three purchases, the biggest of which was for the book publisher and packager Becker & Mayer. Quarto paid

$9.8 million and agreed to provide up to $1 million for capital considerations, as well as another $1.3 million based on the financial performance of Becker & Mayer’s educational-toy division, SmartLab, in 2018 and 2019. Half of Becker & Mayer’s $19.8 million in revenue in 2015 came from the children’s market, an area that Quarto has targeted for expansion.

Readerlink also made more than one acquisition last year. The company, which is the country’s largest book distributor to mass merchandisers and wholesale clubs, beefed up that part of its business with the acquisition of ANconnect. Formerly part of the Anderson Companies, ANconnect added about 3,600 Walmarts and 644 Sam’s Clubs to Readerlink’s distribution network.

Readerlink’s second purchase, the acquisition of Studio Fun International’s assets, bolstered its publishing operation. Before it was restructured and rebranded by parent company Trusted Media Brands, SFI was known as Reader’s Digest Children’s Publishing. Among the assets acquired by Readerlink were Studio Fun’s branded and nonbranded trade and religious formats, its packaging formats, and its international co-edition formats.

A third player to make multiple purchases was an industry newcomer, North Star Editions. The company, which plans to release its first titles for the children’s and young adult market in 2017, bought Flux, the YA fiction imprint of Llewellyn Worldwide. North Star followed up that purchase with the acquisition of Jolly Fish Press, shortly after the independent press announced that it planned to close.

Publishing Acquisitions, 2016