By Zeke Turner

BERLIN--Bertelsmann SE, long eager for full ownership of book publisher Penguin Random House to boost its U.S. exposure, finally has its chance.

The German media giant on Wednesday said it was negotiating to buy the 47% of Penguin Random House that it doesn't own from Pearson PLC, which faces collapsing revenue at its U.S. educational-publishing business. Bertelsmann has the right of first refusal for Pearson's share, according to their 2012 joint-venture agreement.

The stake is the biggest prize that has come to market in recent years in the global book-publishing industry and positions Bertelsmann to consolidate its power in the huge U.S. market.

The merger of Penguin and Random House dwarfed years of deal making in the publishing business, creating the English-speaking world's top consumer bookseller, with annual revenue of EUR3.7 billion ($3.95 billion) and sales of 800 million books, e-books and audio books, according to Bertelsmann.

Deal-making since then has largely consisted of established players buying smaller imprints to augment their portfolios, part of publishing groups' effort to increase their size and better compete against giant media conglomerates.

Collaborations have also reached across industry lines to digital-first players like Amazon.com Inc., following a reduction in conflicts between online booksellers and publishing companies.

HarperCollins, a unit of News Corp, in 2015 struck a pact with Amazon over prices and revenue-sharing. The move followed similar pacts with the online retailer by CBS Corp.'s Simon & Schuster, Lagardère SCA's Hachette Book Group from France and the German Verlagsgruppe Georg von Holtzbrinck GmbH's Macmillan book publisher.

News Corp, which also owns The Wall Street Journal, in 2014 bought romance publisher Harlequin for $415 million to bolster its publishing group.

That same year, Hachette bought Black Dog & Leventhal, a nonfiction publisher. Last year the French publisher expanded its nonfiction business, by acquiring the publishing arm of Perseus Books Group, which included nine imprints.

None of those deals created the scale of the partnership between Pearson and Bertelsmann, which joined 250 brands that publish roughly 15,000 titles annually.

Bertelsmann voiced interest in increasing its stake from the partnership's inception. The German company jostled for a majority share and the right to pick the chief executive of the combined publishing house. Markus Dohle, a member of Bertelsmann's executive board, has served as CEO of Penguin Random House.

The partnership has benefited from successful movie tie-in books such as "The Girl on the Train" by Paula Hawkins and best-selling new work by authors including Colson Whitehead and John Le Carré. Penguin Random House also publishes titles of John Grisham and Ken Follett.

Under terms of the partnership, Pearson had the option to leave the joint venture any time after Jan. 1, 2017. It exercised this right in a call with investors Wednesday morning.

Bertelsmann has had operating control of the merged company since its inception. "From a publishing perspective a sale wouldn't change anything," said Amy Rhodes, a former publishing executive who is now a vice president of the consulting firm Market Partners International.

"The ball is very much in Bertelsmann's court," Pearson Chief FinancialOfficer Coram Williams told reporters. He said Pearson would seek to recapitalize its stake and extract a dividend if there is no deal.

Mr. Williams said that there was no "set price" for Pearson's stake, pointing to pricing terms in the joint-venture contract.

A Pearson spokesman said negotiations "could last several months."

Bertelsmann CEO Thomas Rabe said that the deal would only happen "provided the financial terms are fair."A spokesman for Bertelsmann declined to comment on the value of Pearson's share. Mr. Rabe said in an internal document sent to employees and seen by The Wall Street Journal that he expected a deal.

"New York will remain the headquarters of our global book business," he said. "The United States is the world's largest, most important and most innovative media market by far."

Jeffrey A. Trachtenberg in New York and Simon Zekaria in London contributed to this article.

Write to Zeke Turner atZeke.Turner@wsj.com

(END) Dow Jones Newswires

January 18, 2017 12:32 ET (17:32 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.