Penguin Sells Self-Publishing Company

Penguin Random House has sold self-publishing company Author Solutions to an affiliate of Najafi Cos., a Phoenix-based private-equity firm.

The deal, which closed Dec. 31, was announced Tuesday. Financial terms weren't disclosed. Penguin Group had acquired Author Solutions, based in Bloomington, Ind., in 2012 for $116 million.

Jahm Najafi, who heads Najafi Cos., is well-known in the book industry. He attempted to acquire Borders Group Inc. out of bankruptcy in 2011, but his efforts fell short and the bookstore chain was liquidated. With Author Solutions, Mr. Najafi is getting a company that has enabled more than 200,000 authors to self-publish more than 250,000 titles, according to Keith Ogorek, Author Solutions' senior vice president of marketing.

"It's consistent with our philosophy of trying to connect content owners with consumers," said Mr. Najafi in an interview. "We think there's room for growth domestically and internationally. There are many people interested in sharing their ideas who can't go through traditional channels."

When Penguin Group bought Author Solutions from private-equity firm Bertram Capital Management LLC, the publishing industry was facing a growing competitive challenge from independent authors who primarily published via e-books. John Makinson, who then headed Penguin, said he saw the purchase as a way to learn more about customer buying and reading habits.

Penguin subsequently merged with Random House in 2013, forming Penguin Random House, majority owned by Bertelsmann SE. Penguin Random House has since shown little appetite for the self-publishing business, preferring instead to focus on its core publishing business.

In a note to employees Tuesday, Markus Dohle, CEO of Penguin Random House, wrote that the sale reaffirms "our focus on consumer book publishing through our 250 imprints worldwide."

Andrew Phillips, chief executive of Author Solutions, is staying in place, according to Mr. Ogorek. The company has imprints including AuthorHouse, iUniverse, and Trafford Publishing.

Write to Jeffrey A. Trachtenberg at [e-mail]

(END) Dow Jones Newswires

January 05, 2016 15:45 ET (20:45 GMT)

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