Book sector set for mega-merger

New Holland and Random are keeping mum on the exact value of the deal at this stage, although Brian Wootton, CEO of New Holland, said the Competition Commission guidelines for mergers would give an idea of the size of the deal.

Accoring to the guidelines, the commission must be notified of all mergers and acquisitions if the combined annual turnover or combined assets of the acquiring firm is more than R200m and the target firm is more than R30m.

If the deal is approved then Stephen Johnson, managing director of Random House South Africa will lead the combined business, reporting directly to Brian Wootton.

New Holland, which already has a publishing house in London and strong publishing ties to Australia, will now have the financial muscle-power of Random behind it.

Random, a US-based international publishing giant owned by Bertelsmann, earns US$2.3bn in annual revenue a year and makes $230m profit. It publishes an average of 67 new books each week and has 15 to 20 best sellers at any given time.

Best-sellers include Barack Obama's Audacity of Hope, Dan Brown's Da Vinci Code and authors include Deepak Chopra, Samuel Pepys, Noam Chomsky and Jean Auel.

Random paid Bill Clinton $15m as an advance for his autobiography and last year bought 90% of Virgin Books for £3,5m and paid a further £1m advance to Richard Branson for five more books under his pen.

Cementing relationship

"Discussions between Random House and New Holland started in late January," says Wootton. "If you have a look at Struik, it is largely an illustrated non-fiction publisher while Random House is primarily fiction."

Wootton says a the two companies already have a relationship: Avusa, New Holland's holding company, has a 20% stake in Random House South Africa.

The publishing market is tough and combining the business makes us stronger, says Wootton. Publishers globally have been under pressure in recent years, with lower book sales and high paper prices (although Random House will have 10% of all paper used recycled by 2010, the most ambitious environmentally sensitive plan from any publishing house in the world yet).

Wootton says that although Struik imprints Zebra, Oshun and Two Dogs will be included in the deal, Struik Christian, Map Studio and some of its foreign holdings will not be included.

Struik, which is almost half a century old, is one of the oldest and most respected publishers in Africa. It dominates in the expensive natural history publishing arena, with top sellers like bird books by Kenneth Newman and Sasol and authors like Johan Marais and Ian Sinclair.

It is in the highly competitive lifestyle markets that pressure is intense with as few as 10 000 sales making a book a best-seller in South Africa.

Wootton says the deal won't necessarily give New Holland authors better access to global markets - they are already sold on sites like Amazon or through the London office - but it does broaden their potential to access fiction and the highly lucrative (but difficult for authors to break into) children's book publishing market, which Random dominates.

Top-selling books from New Holland at present include In Black and White - The Jake White Story by Craig Ray and Jake White, Zhoozsh! by Jacqui and Jeremy Mansfield, Making Money out of Property in South Africa by Jason Lee, Some of my Best Friends are White by Ndumiso Ngcobo and 32 Battalion by Piet Nortje.

- Fin24