A new chapter in the 77-year history of book publisher Penguin has been written with a deal to merge the business with rival Random House.
The new venture, which will be called Penguin Random House, will have an estimated one quarter share of the market for English language book sales and generate annual revenues in the region of £2.5 billion.
Penguin's owner Pearson, which also publishes the Financial Times, will have a 47% stake with Random House's German owner Bertelsmann holding the rest.
The deal still requires regulatory clearance and is not expected to be completed until the second half of next year. There is also the possibility that a rival party may derail the partnership, with HarperCollins owner News Corporation reportedly interested in making a £1 billion offer for Penguin.
Unveiling the deal, the two companies said the tie-up will deliver "significant benefits" such as shared resources and a greater level of investment in authors and products than would be possible as standalone firms.
The combined company would be home to writers as diverse as Random House's Jack Reacher creator Lee Child and Fifty Shades Of Grey's EL James and Penguin's long list of classical authors such as Charles Dickens and Jane Austen.
London-based Penguin employs 5,500 people worldwide, with around 950 in the UK. Random House has 5,300 staff globally and last year its sales accounted for just under 15% of the UK market, compared with Penguin's 11%. Penguin is one of the most recognisable brands in the world, having been set up by Allen Lane in 1935.
Pearson's chief executive Dame Marjorie Scardino described Penguin as a "successful, highly-respected and much-loved part" of the company and said Random House was an almost perfect match in terms of Penguin's culture, standards and commitment to publishing excellence.
She said the two publishers will be able to be more adventurous in trying new models in the world of digital books and digital readers.
Bertelsmann will have five directors on the board of the joint venture, with Pearson able to nominate four. John Makinson, currently chairman and chief executive of Penguin, will be chairman, with Random House chief executive Markus Dohle taking the same role in the combined company.
10 biggest companies in the world
Penguin unveils new merger deal
Wal-Mart Stores, or Walmart, is an American retailer that runs chains of discount department and warehouse stores around the world.
The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and first traded on the New York Stock Exchange in 1972. It is headquartered in Bentonville, Arkansas and has around 8,500 stores in 15 countries, under 55 different names.
Royal Dutch Shell, more commonly known as Shell, is a global oil and gas company headquartered in Holland, but with its registered office in London.
With operations in more than 90 countries, it is active in every area of the oil and gas industry, including exploration and production, refining, petrochemicals, power generation and trading.
Exxon Mobil Corporation, or ExxonMobil, is an American oil and gas corporation formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas.
With 37 oil refineries in 21 countries, Exxon Mobil Corporation is the largest refiner in the world.
BP is yet another global oil and gas company, this time headquartered in London. It has operations in more than 80 countries, produces about 3.8 million barrels of oil per day and has 22,400 service stations worldwide.
The name BP is derived from the initials of one of the company's former legal names, British Petroleum.
Sinopec Group is one of the major petroleum companies in China, headquartered in Beijing.
Its business includes oil and gas exploration as well as the production and sales of petrochemicals and chemical fibres.
China National Petroleum Corporation is a state-owned fuel-producing corporation and the largest integrated oil and gas company in China. It has its headquarters in Beijing.
CNPC - the parent company of PetroChina - was created in 17 September 1988 when the government decided to disband the Ministry of Petroleum and create a state owned company to handle all Petroleum activities in China.
State Grid Corporation of China is the largest electric power transmission and distribution company in China, once again headquartered in Beijing.
It has subsidiaries in Northern China, Northeastern China, Eastern China, Middle China and Northwestern China.
Toyota Motor Corporation, more commonly known simply as Toyota, is a multinational automaker headquartered in Toyota, Japan.
The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's company Toyota Industries. Its brands include Toyota, Lexus and Daihatsu.
Japan Post Holdings is a state-owned Japanese company that deals with mail delivery and financial services.
It is headquartered in Tokyo and was founded on January 23, 2006.
Chevron Corporation is an American energy company headquartered in San Ramon, California.
It is active in more than 180 countries and is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production, and power generation.