NEW YORK (CNNfn) - German multimedia giant Bertelsmann AG, Europe's largest media group and the third-largest media company in the world, announced Wednesday it will buy the largest U.S. publisher, Random House Inc., from holding company Advance Publications Inc.
The acquisition, targeted for a mid-year close, is subject to regulatory approval.
Officials at Bertelsmann and Advance Publications Inc., both of which are privately held, declined to divulge financial details of the deal at a press conference Monday in Munich, where Bertelsmann is headquartered.
After the expected closing, the U.S. market will represent 35 percent of Bertelsmann's worldwide sales volume, on a par with its German business.
Stuart Applebaum, a company spokesman based in New York, called the deal "a tremendous step forward" in Bertelsmann's drive to expand its presence in the publishing of consumer trade books.
Mark Woessner, Bertelsmann's chairman and chief executive officer, reiterated this stance at Monday's announcement in Munich. Speaking about the 150-year-long legacy of book-publishing at Bertelsmann, he called it the "heritage and very foundation" upon which his company's latter-day media empire was built.
Woessner said that expanding English-language book-publishing had been "an increasing strategic priority" since Bertelsmann bought Bantam Books in 1977. The success of Bantam Doubleday Dell Publishing Group in more recent years, he said, had reinforced this priority.
Bertelsmann owns the Bantam Doubleday Dell Publishing Group Inc., a leading publisher of hardcover, paperback and audio books for adults and young readers created after Bertelsmann acquired the former Doubleday & Co. in December 1986.
"We believe trade book publishing has a strong and promising future," Woessner said.
The new company, to be called Random House Inc., will retain all the publishing divisions and imprints of Random House and Bantam Doubleday Dell in the U.S. and its affiliates and subsidiaries around the world.
The acquisition reflects Bertelsmann's ambitions to build upon its leading position in the international publishing industry. Bertelsmann reported about $16 billion in revenues last year.
Bertelsmann, which has over 57,000 employees, said it would merge its existing U.S. book publishing operations with those of Random House. The combination would create an entity with estimated revenues of $1.38 billion to $1.67 billion.
Random House, the largest English language book publisher in the world, has annual revenues of about $1 billion. Its holding company, Staten Island, N.Y.-based Advance Publications Inc., has interests in books, magazines, newspapers and cable television. In 1997, Advance Publications ranked 34 on the Forbes Private 500.
Bertelsmann's purchase of Random House follows recent additions to its television holdings. Early last year, Bertelsmann received regulatory approval for the merger of its television and broadcasting interests with Cie Luxembourgeoise de Telediffusion (CLT) in CLT-Ufa, a Luxembourg-German broadcaster.
The company also has been involved in a European online services venture with Internet giant America Online Inc. since 1995.
In North America, Bertelsmann's media properties extend beyond the Bantam Doubleday Dell Publishing Group and Doubleday Direct Inc. to include BMG Entertainment's RCA and Arista record labels.
As a majority shareholder in Gruner + Jahr USA, Bertelsmann also has interests in Family Circle, McCall's, Parents and YM magazines.