British publishing house Penguin and German media group Random House announced a 2.4 billion pound merger deal that will create the biggest book publisher in the world, BBC reported.
The new company would be run as a joint venture known as Penguin Random House, with the tie up expected to be completed in the second half of next year subject to regulatory approvals.
While the German media giant Bertelsmann will own 53 per cent of the joint venture, Pearson will own 47 per cent.
The merger comes amid reports that Rupert Murdoch-run News Corp - which also owns Harper Collins - was bidding to make a substantial cash offer to takeover Penguin.
"The combination brings together two of the world's leading English language publishers, with highly complimentary skills," a statement by Pearson said.
Based on recent results, combining the two firms will create a business with annual revenues of about 2.5 billion pounds.
In 2011, Random House's revenues were 1.7 billion euros with an operating profit of 185 million euros. Penguin recorded revenues of 1 billion pounds.