Penguin and Random House to merge

Leading publishers, Random House and Penguin, have confirmed they're in merger talks.

Britain's Pearson group, which has owned Penguin since 1970, says it's in talks with Bertelsmann, the German media giant that owns Random House.

Pearson also owns Britain's Financial Times newspaper.

A deal could be be worth an estimated A$3.8 billion, and would create the world's biggest book publisher.