Penguin Random House, the world's largest book publisher, and smaller US rival Simon & Schuster have scrapped a $2.2 billion deal to merge after the deal was blocked by US regulators.
Bertelsmann, the German media group which owns Penguin, had initially said it would appeal a US judge's decision at the start of this month that said its purchase of Simon & Schuster would be illegal because it would hit authors' pay.
But Bertelsmann said in a statement on Monday that it "will advance the growth of its global book publishing business without the previously planned merger of Penguin Random House and Simon & Schuster".
READ: Penguin Random House acquisition of rival publisher Simon & Schuster blocked
Reuters reported on Sunday that the German company was unable to convince Paramount Global, Simon & Schuster's owner, to extend their deal agreement and appeal the judge's decision.
Paramount said on Monday that Simon & Schuster was a "non-core asset" to Paramount.
"It is not video-based and therefore does not fit strategically within Paramount's broader portfolio," the company said in a filing on the deal's termination, reported by Reuters.
With the deal's dissolution, Penguin will pay a $200 million termination fee to Paramount.
The US Justice Department "is pleased that Penguin Random House and Simon & Schuster have opted not to appeal," Assistant Attorney General Jonathan Kanter said in a statement.
Judge Florence Pan of the US District Court for the District of Columbia had ruled on October 31 that the Justice Department had shown the deal could substantially lessen competition "in the market for the US publishing rights to anticipated top-selling books".
In hearings held in August, the government argued that the largest five publishers control 90% of the market, and a combined Penguin and Simon & Schuster would control nearly half of the market for publishing rights to blockbuster books, while its nearest competitors would be less than half its size.
The top five publishers are Penguin Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette, with Walt Disney Co and Amazon.com Inc (NASDAQ:AMZN) also in the market. HarperCollins is owned by News Corp (NASDAQ:NWS).
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