The private equity firm KKR has signed a definitive agreement to acquire OverDrive in a deal announced on Christmas Eve. KKR bought the leading digital platform that delivers e-books and digital audio to libraries and schools from Rakuten USA, a subsidiary of Japan’s Rakuten Inc. Rakuten bought OverDrive in April 2015 from founder Steve Potash for $410 million. No price was disclosed in the KKR purchase, but Rakuten said it would recognize about $365.6 million in profit from the sale in the first quarter of 2020.
Rakuten bought OverDrive after it acquired Canada's e-book company Kobo in 2012; the OverDrive purchase, Rakuten said at the time, would allow it "to extend our mission of empowerment to new market segments and accelerate the growth of our digital content businesses.”
OverDrive's purchase from Rakuten was engineered by KKR’s Richard Sarnoff, a one-time executive at Random House who also was president of Bertelsmann Digital Media Investments until leaving for KKR in 2011. (Sarnoff was also PW’s Person of the Year in 2009 for his role the Google Book Search Settlement). In a statement, Sarnoff said KKR was “delighted” to be investing in OverDrive which provides tools to libraries and schools “so that they can lend the widest variety of digital books, audiobooks, and other materials, while at the same time respecting and compensating authors and publishers through the widest range of access models.”
Potash will continue to oversee OverDrive and said he welcomed the KKR purchase. “OverDrive is very excited to work with the world-class KKR team due to their track record of accelerating digital media and technology businesses in global markets,”Potash said. “This provides access to an extraordinary network of capabilities to empower our institutional partners for the benefit of the communities and readers they serve.” OverDrive currently serves about 43,000 libraries and schools in 76 countries.
Among the other digital media investments made by KKR was the 2018 purchase of RBmedia, one of the largest independent publishers and distributors of audiobooks, That purchase was also overseen by Sarnoff.