On Thursday afternoon, Perseus Books Group ceo David Steinberger told employees that the deal struck in late June to sell Perseus to HBG, with the Perseus Distribution lines to be immediately sold to Ingram, has fallen apart and been cancelled. "The planned transaction involving our company, Hachette and Ingram is not moving forward," Steinberger wrote. "Despite much effort from all three parties, we could not reach agreement on everything necessary to close the transaction."
Hachette added in a statement of its own that "the planned transaction involving HBG, Perseus, and Ingram has been terminated. Despite great effort from all three parties, we could not reach agreement on all of the issues necessary to close the transaction." (A spokesperson for Ingram declined further comment other than to confirm the deal was off.)
The sale had been postponed on July 31, right before the original closing date, with tentative statements that "the goal" was "to close by the end of August," saying that "this transaction is more complex because there are three parties involved and so more time is needed." Steinberger says the "company just completed a strong fiscal 2014" and they "have ambitious plans for fiscal 2015 and beyond."
Among the modest unanswered questions for now is what will become of Perseus's boutique distribution line Legato. Ingram had said that president and founder Mark Suchomel's employment would be terminated after they took over the Perseus distribution companies and they planned on folding Legato into PGW, of which it was an affiliate. Suchomel is still on staff for now, and Perseus "will be discussing" the future of Suchomel and Legato internally.
At the least, it does spare Perseus authors from wondering whether they would be caught up in Hachette's continuing standoff with Amazon over terms. While the Perseus publishing imprints can continue operations in uninterrupted fashion, the open question on Suchomel and Legato is just one hint of potential effects on the big roster of hundreds of Perseus distribution clients. While operations, and distribution agreements, will continue as before, Perseus may face increased competition to hold on to some of those clients when their contracts are up for renewal, along with shoring up relationships with joint-venture partners such as The Weinstein Company and Faber and Faber in the UK.
At the same time, all indications are that Perseus intends to resume running and building their business for the long term. Perseus has been the object of acquisition interest over the years, though people familiar with the situation say that the company had not hired bankers or solicited a sale -- either from HBG, or in the past, though a number of bidders have approached Perseus in recent years.
The broken deal also leaves Hachette still looking to bolster its backlist, and its nonfiction lines in particular. (The deal would have provided the company with over 6,o00 titles, nearly all nonfiction, and would have diversified their business, which is heavily focused on frontlist fiction.) As HBG ceo Michael Pietsch had said in announcing the deal in June, "This exciting acquisition adds a new program of extraordinary diversity, vibrancy, and strength to HBG’s portfolio of publishers. It fits our strategic goals of growth and nonfiction expansion. At the same time it significantly increases HBG’s backlist, and will expand our offerings for special markets, gift accounts, and academic markets. It also expands HBG's geographical diversity."
HBG parent Lagardere had told investors in a presentation in late May it was their intention to growth their nonfiction line, and expand HBG USA overall: "It is necessary to be a bigger player in the USA than in the UK in order to secure enough primary rights," they had said, also noting, "Size is, and will continue to be, a critical asset in the forthcoming years in this market."