NEW YORK, NY.- Paramount said Monday that it had reached a deal to sell Simon & Schuster, one of the biggest and most prestigious publishing houses in the United States, to the private equity firm KKR, in a major changing of the guard in the books business.

The deal, for $1.62 billion, will put control of the cultural touchstone behind authors including Stephen King and Bob Woodward in the hands of a financial buyer with an expanding presence in the publishing industry.

Although private equity investors have had a significant footprint in the book business — different firms have owned literary agencies, publishing houses and retailer Barnes & Noble — the acquisition of one of the largest publishers in the country vastly increases the hold of financial interests in the business.

“I think I speak on behalf of the entire management team when I say we are thrilled with the result,” Jon Karp, CEO of Simon & Schuster, said in an interview. “They plan to invest in us and make us even greater than we already are. What more could a publishing company want?”

Karp will stay on as CEO after the deal closes.

Richard Sarnoff, an adviser to KKR on its media deals, is a familiar name to many in the publishing industry and his involvement is encouraging, several publishing executives said Monday. Sarnoff has held multiple positions at Bertelsmann, the company that owns Penguin Random House, and served as chair of the Association of American Publishers, a trade group.

In letters to Simon & Schuster’s staff members and authors, Karp said that he had known Sarnoff for two decades, and that he “understands the nuances of the book business as well as anyone I know.”

Also involved is Ted Oberwager, who leads KKR’s gaming, media, entertainment and sports group. Oberwager is on the board of RBMedia, an audiobook company, and Skydance Media, which teamed up with Paramount Pictures on “Top Gun: Maverick,” a Tom Cruise action drama that generated more than $1 billion.

Since Simon & Schuster was first put up for sale in 2020, many in the publishing industry have fretted over where the company might land. The publisher, which will celebrate its 100th anniversary next year, has had more than seven owners in its history.

A sale to another publisher would mean the new management would understand the book business. But it would also mean further consolidation in the industry, with potentially fewer players available to bid on big books, and the chance of layoffs as redundant jobs were eliminated. It could also raise regulatory scrutiny: Paramount’s first attempt to sell Simon & Schuster, to Penguin Random House, was derailed by government antitrust concerns.

Acquisition by a private equity firm, on the other hand, presents its own risks. The ruthless side of that business was immortalized in a 1989 book, “Barbarians at the Gate,” which detailed KKR’s acquisition of Nabisco and the burden the deal’s debt left on the company.

Gustavo Schwed, a management professor at New York University’s Stern School of Business, said the sale would allow KKR to invest in a business that was no longer viewed as core by its seller. But, like any private equity deal, the amount of debt KKR uses to finance the acquisition will help determine the publisher’s financial constraints.

“Sometimes, despite your best intentions, things crash and burn — and the more leverage you use, the more risk there is of that happening,” Schwed said.

KKR did not outline its financing plans Monday. LionTree Advisors and Shearman & Sterling advised Paramount on the deal.

As part of the deal, Simon & Schuster employees will receive an ownership stake in the company, part of a program KKR developed to improve engagement among those who work in the companies it buys. The private equity firm used this model with RBMedia, which KKR acquired in 2018.

That bet paid off: KKR agreed to sell RBMedia last month to another investment firm for a substantially higher price. KKR said that under its ownership RBMedia doubled the size of its audiobook catalog, from more than 31,000 to more than 66,000 audiobooks.

Because employees had an ownership stake in the company, when RBMedia was sold, those who worked there earned a cash payout from the sale worth up to two times their salary, KKR said.

In addition to RBMedia, KKR has also invested in another company in the book world: Overdrive, a digital reading platform used in libraries and schools.

Pete Stavros, a co-head of global private equity at KKR, said in an interview that the deal would give Simon & Schuster employees the chance at achieving “a life-impacting amount of wealth.”

Stavros and Sarnoff said they saw opportunities for the publisher in international expansion and in audiobooks, a significant point of growth for the industry at large. Sarnoff said he didn’t expect the deal to have any impact on Simon & Schuster authors.

The road to Monday’s announcement has been long and bumpy.

After Paramount (then called ViacomCBS) reached an agreement to sell Simon & Schuster to Penguin Random House, the country’s largest book publisher, for $2.18 billion, the Biden administration challenged the sale in court. A judge sided with the government last year.

Rather than appeal, Paramount decided to put Simon & Schuster back on the market, obligating Penguin Random House to pay a $200 million termination fee for its trouble, on top of millions in legal costs.

Since the first deal crumbled, Simon & Schuster has performed well and remained an attractive purchase. In the first quarter of 2023, its sales rose to $258 million, up 19% from the prior year. Results at other major publishers, by contrast, were disappointing during that period.

Although KKR’s offer for the publisher is less than what Penguin Random House had agreed to pay, the difference in the price is partially offset by the termination fee paid to Paramount and earnings from the publisher. But KKR is an attractive buyer, in part because it is unlikely to raise red flags with regulators.

“Paramount doesn’t want to traipse through another deal that goes bust,” said Erik Gordon, a professor at the University of Michigan Ross School of Business. “It wants to sell the business without more surprises.”

This article originally appeared in The New York Times.