Penguin scraps $2.2bn deal to buy rival publisher

Publishing giant Penguin Random House has scrapped a $2.2bn (£1.9bn) planned takeover of rival Simon & Schuster.

Last month, a US court blocked the deal, saying it could "substantially" weaken competition in the industry, reports BBC.

Penguin's parent company Bertelsmann said Paramount Global, the owner of Simon & Schuster, decided not to appeal the ruling.

The proposed deal would have cemented Penguin Random House's position as the world's largest book publisher.

"We believe the judge's ruling is wrong" the company said in a statement.

"However, we have to accept Paramount's decision not to move forward," it added.

On October 31, Judge Florence Pan ruled that the US Justice Department had shown the deal could substantially lessen competition "in the market for the US publishing rights to anticipated top-selling books".

During a trial in August, the US government argued that Penguin and Simon & Schuster combined would control nearly half the market for publishing rights of blockbuster books.

Initially, Penguin said it planned to appeal the ruling, calling it "an unfortunate setback for readers and authors".

Daniel Petrocelli, who represented Penguin, said the two publishing houses would deliver "enormous benefits" to readers and authors as they would continue to compete against each other even after merging.

However, best-selling horror writer Stephen King dismissed the claim.

"You might as well say you're going to have a husband and wife bidding against each other for the same house. It's kind of ridiculous," he told the court.

Penguin Random House is obligated to pay a $200m termination fee to Paramount.

"Simon & Schuster remains a non-core asset to Paramount," according to a public statement public. "However, it is not video-based and therefore does not fit strategically within Paramount's broader portfolio."

Penguin Random House was formed through the merger of two major publishers from the UK and the US in 2013.