Rupert Murdoch has lost out in the bidding for Simon & Schuster to the German media group Bertelsmann, in a rare defeat that will be seen as the latest sign of dynastic succession at News Corp.

Bertelsmann's Penguin Random House has emerged victorious in a takeover tussle between three of the world's biggest media companies after striking a $2.2bn (£1.6bn) deal to buy the publisher from US entertainment giant ViacomCBS.

Bertelsmann had been vying with News Corp and French media giant Vivendi, paying about $500m more than the expected $1.7bn price tag for Simon & Schuster, the 96-old-publisher behind authors including Stephen King.

The move reinforces Penguin Random House's position as the world's largest book publisher and puts a significant dent in the ambitions of News Corp's HarperCollins, the second-biggest publisher in the American market.

Failure to secure Simon & Schuster could mark the end of an era for News Corp after Rupert Murdoch garnered a reputation for paying over the odds to secure takeover targets.

News Corp insiders speculated that the company’s famous appetite for winning at any price may have been curbed as Lachlan Murdoch, Rupert's oldest son, tightens his grip on the company.

Thomas Rabe, chief executive of Bertelsmann, said the takeover marked "another strategic milestone in strengthening its global content business".

He was confident the move would get approved by regulators, saying he spent "many months intensively looking at whether the deal can be approved".

The tie-up drew a stinging response from News Corp chief executive Robert Thomson, who claimed there was "no market logic to a bid of that size - only anti-market logic".

"Bertelsmann is not just buying a book publisher, but buying market dominance as a book behemoth," he added.

"Distributors, retailers, authors and readers would be paying for this proposed deal for a very long time to come. There will certainly be legal books written about this deal, though I wonder if Bertelsmann would publish them.”

The deal combines Penguin Random House's 24pc share of the American market with Simon & Schuster's 9pc slice, according to data from NPD Bookscan. HarperCollins had a 24pc share of the US market in 2019.

It also brings together novelists Margaret Atwood and Toni Morrison at Penguin Random House, with authors such as Bob Woodward and Mary Higgins Clark at Simon & Schuster.