U.S. toy maker Hasbro has agreed to buy Peppa Pig and PJ Masks owner Entertainment One but the $4 billion offer could start a bidding war.
The back story. London-listed Entertainment One’s infant and pre-school titles, as well as its merchandise, have long made it a takeover target.
The company, headquartered in Toronto, rejected a £1bn takeover bid from British broadcaster ITV in 2016 after saying the cash 236p a share offer undervalued it.
U.S. toy maker Hasbro has strengthened its TV and Film merchandise portfolio in recent years, paying $520 million last year for the Power Rangers franchise.
What’s new. Hasbro announced it had agreed to buy Entertainment One in a $4 billion deal at 560p per share – a 26.4% premium to Thursday’s closing price.
Popular global preschool brands Peppa Pig and PJ Masks would be added to Hasbro’s portfolio, which includes Transformers, My Little Pony and the Monopoly board game.
Hasbro described the two properties as “highly profitable and merchandisable” preschool brands.
The U.S. company said it would realize annual synergies of $130 million by 2022 after integrating Entertainment One’s toy business and merchandising.
Entertainment One’s stock surged 32% in early trading on Friday, above the 560p per share deal price, to 583p.
Moving forward. Entertainment One has long been a takeover target due to the lucrative nature of its children’s TV brands.
The share price has climbed above Hasbro’s bid price, which suggests investors may be banking on a counter offer.
The likes of Amazon and Netflix, or maybe even Disney – part owner of PJ Masks – may be tempted as they look bolster their streaming services.
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