Britain's Pearson is selling its 25% stake in Penguin Random House to German partner Bertelsmann, ending a near 50-year association with consumer publishing to focus solely on education.
The $675m deal will be the final move by John Fallon, whom Pearson said would step down next year after seven years as chief executive as soon as a successor was found.
John Fallon has sought to transform Pearson from a conglomerate to a world leader in digital education.
He sold the Financial Times, a 50% stake in the Economist and spun off Penguin into a joint venture with Bertelsmann in 2013.
But he failed to predict how quickly the education market would shift from textbooks to digital products, resulting in sales falling for five years until this year, when it forecasts revenue will stabilise.
Pearson chairman Sidney Taurel, who will lead the CEO search, said Fallon had tirelessly led the group through a period of "some very challenging markets".
Mr Fallon said there was still a lot to do, but the group was making good progress with more than 75% of the company growing.
"We're now at the stage where it's time to transition to a new leader, who can bring a fresh perspective," he said.
Shares in Pearson led gainers on the FTSE 100 index after news of the Penguin Random House deal, which will result in a £350m share buyback, and Fallon's departure.
Penguin, founded in 1935 by Allen Lane and his brothers, revolutionised the book market by selling paperbacks for as little as 6 pence.
It was bought by Pearson in 1970, a decade after it published DH Lawrence's long-banned "Lady Chatterley's Lover."
Penguin Random House, which published Michelle Obama's memoir "Becoming" and counts Tom Clancy and Margaret Atwood in its list of authors, reported revenue of $3.7 billion and operating profit of $467m in 2018.
It contributed £68m ($87m) after tax to Pearson's adjusted operating profit.
Bertelsmann chief executive Thomas Rabe said owning all of the publishing group, which had 481 titles in the New York Times bestseller list last year, was a "milestone for Bertelsmann".
He said Bertelsmann would continue to expand Penguin Random House through organic growth and acquisitions.
