Penguin group, renowned publishing brand owned by media conglomerate Pearson Plc has agreed to merge its business with Random House, one of the world's largest book publishers owned by German media giant Bertelsmann in a deal worth approximately £2.4 billion.

''Pearson and Bertelsmann agree to combine Penguin and Random House, creating the world's leading trade publisher,'' Pearson said in a statement today.

The combination brings together two of the world's leading English language publishers, with highly complementary skills and strengths, it further stated.

Yesterday, Rupert Murdoch owned Sunday Times had suggested that Murdoch's News Corp Inc was likely to bid for the Penguin group (See: News Corp plans to buy Pearson's Penguin Group for around $1.6 billion: report).

Random House is the leading English language publisher in the US and the UK, while Penguin is the world's most famous publishing brand and has a strong presence in fast-growing developing markets.

The newly-created joint venture Penguin Random House will be 53 per cent owned by Bertelsmann, while Pearson will own the remaining 47 per cent. The new business will not include Bertelsmann's publishing business in Germany.

Pearson's chief executive Marjorie Scardino, said in a statement, ''Penguin is a successful, highly-respected and much-loved part of Pearson. This combination with Random House – a company with an almost perfect match of Penguin's culture, standards and commitment to publishing excellence – will greatly enhance its fortunes and its opportunities.

The move comes less than two weeks after Pearson, the publisher of Penguin books and the Financial Times, acquired US online educational services company EmbanetCompass from an investor group led by Technology Crossover Ventures and Knowledge Universe, for $650 million in cash.

Penguin, well-known for its high-quality, inexpensive paperbacks, publishes about 4,000 books annually and reported revenue of £1 billion in 2011. Revenue from e-books accounts for around 12 percent of Penguin's global revenues.

The publisher has been facing stiff competition in recent times from online retailers and technology giants such as Amazon, Apple and Google which offer lower-priced e-books, as readers are becoming increasingly attracted to the new technology over conventional paperbacks.

The group's sales dropped 4 per cent to £441 million in the first half of 2012 and profits nearly halved to £22 million from £42 million during the period on continued pressure of physical book retailing, even as its books won two Pulitzer prizes.

Pearson, headquartered in London, is the world's leading learning company, providing educational materials, technologies, assessments and related services to teachers and students of all ages.

Industry analysts believe that Pearson is selling part of it's the publishing business to focus more on its fast growing education business.

Bertelsmann is majority owner of the magazine publisher Gruner + Jahr, which includes the Financial Times Deutschland in its list. There has been speculation over the future of the German version of the paper, which recently shrank its print version.

New York-based Random House is the largest book publisher in the world. Founded in 1927 by Americans Bennett Cerf and Donald Klopfer, Random House has been owned since 1998 by Bertelsmann.

It also has an entertainment production arm for film and television, Random House Studio, and also creates story content for media including video games, social networks on the web, and mobile platforms.

Random House reported revenue of €1.7 (£1.4 billion in 2011) with operating earnings of €185 (£149 million).

Meanwhile, yesterday media reports suggested that media mogul Rupert Murdoch's News Corp Inc was likely to bid for the Penguin group, joining the race for the renowned book publisher.

Murdoch, the chairman and chief executive officer of News Corp is understood to have indicated that he will make a substantial cash offer of about £1 billion for Penguin, subject to due diligence, the Sunday Times reported.

New York-based News Corp already owns one of Penguin's big rivals, Harper Collins. A combination of Penguin and Harper Collins would have a market share of around 20 per cent of English-language book sales globally.

In 1989, Collins was acquired by News Corp, who merged it with its 1987 acquisition of Harper & Row to form HarperCollins.

HarperCollins is  one of the largest English-language publishers in the world, and has publishing groups globally, including the HarperCollins General Books Group, HarperCollins Children's Books Group, Zondervan, HarperCollins UK, HarperCollins Canada, HarperCollins Australia/New Zealand and HarperCollins India.

With nearly 200 years of history HarperCollins has published some of the world's foremost authors and has won numerous awards including the Nobel Prize, the Pulitzer Prize and National Book Award, the Newbery Medal and the Caldecott.

Penguin and Random House believe their combination would help them to cut costs and streamline their resources to increase their competitiveness to take on rival Hachette.

The merger of two of the world's largest publishers is likely to face major regulatory hurdles in the US and the EU.

On the other hand, a combination of Penguin and Harper Collins is believed to confront fewer regulatory challenges, according to some analysts.

Earlier in April, the US justice department initiated an antitrust lawsuit against five large publishers including Penguin Group USA, alleging them and technology giant Apple of colluding in the pricing of e-books, and sales models.

Three of the publishers Hachette Book Group, Simon & Schuster and Harper Collins, settled their cases while Penguin and McMillan have not.