Hachette Three-way Publisher Tie-up is Abandoned

NEW YORK (The Deal) -- Although Hachette Book Group Inc., Perseus Books Group and Ingram Content Group Inc. have called off their three-way deal, the termination doesn't necessarily spell an end to dealmaking for the three media houses.

About seven weeks after the trio announced they had entered into an agreement in which Hachette would buy Perseus then sell Perseus' client services unit to Ingram, Perseus chief executive David Steinberger wrote in a Thursday, Aug. 7, e-mail to employees that "the planned transaction involving [Perseus], Hachette and Ingram is not moving forward." He added that "despite much effort from all three parties, [they] could not reach agreement on everything necessary to close the transaction."

Officials with Hachette and Ingram also confirmed the proposed transaction had ended, but they declined further comment.

The deal’s coming apart is set against the backdrop of Hachette’s public squabble with Amazon.com’s (AMZN) about the online retailer’s pricing of e-books.

"I don't think there was a problem on the Hachette-Perseus side of the deal," said David Worlock, co-chairman of Leadership Programs at media industry-focused research firm Outsell Inc.

When Ingram began examining the deal, it likely "began to realize that this would change the market share of Ingram sufficiently to evoke some sort of regulatory reference," he said. It then may have suggested placing a clause in the agreement asking for a form of compensation if the deal did not win regulatory approval, according to Worlock.

"At that point, it probably fell down," he said.

Worlock noted a Hachette-Perseus deal would have received a green light, adding it would have been "much more sensible" for Hachette to purchase Perseus as a whole and then sell the distribution side to whomever wanted it.

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