Pearson, which owns Penguin and the Financial Times, confirmed on Thursday that it has entered into merger discussions with Bertelsmann, the privately owned German company that owns Random House.
If the merger goes ahead it will bring together two of the world's "big six" publishers, and the combined company will be home to authors as diverse as legal thriller writer John Grisham and teenage Olympian diver Tom Daley.
A spokesperson confirmed merger talks were active, saying: "Pearson confirms that it is discussing with Bertelsmann a possible combination of Penguin and Random House. The two companies have not reached agreement and there is no certainty that the discussions will lead to a transaction,"
Bertelsmann, which is Europe's biggest media group and owns X Factor producer FremantleMedia, declined to comment.
Speculation about the merger was first reported by German publication Manager Magazin and the Financial Times.
Manager Magazin said the publishers had already begun talks with competition authorities in the US and Brussels. It said Bertelsmann would end up owning the majority of the combined company, with Pearson taking a smaller than 50% stake. A source at Random House told the magazine that negotiations were "promising".
Analysts have long predicted further consolidation in the book trade, which is dominated by HarperCollins, Random House, Hachette, Simon & Schuster, Macmillan and Penguin.
The merger talks come less than a month after Pearson chief executive Marjorie Scardino announced her intention to stand down as chief executive after 15 years at the helm.
Scardino's resignation sparked a wave of speculation that it may herald the sale of the FT, which she had vowed would only be sold "over my dead body".
Since posting the above, and other items on the subject, I have received the following communication from Pearson:
Statement on media coverage regarding Penguin
For more information
Luke Swanson / Simon Mays-Smith / Charles Goldsmith +44 (0)207 010 2310