EntertainmentOne plunges as ITV switches off

ITV has withdrawn its proposed acquisition of Entertainment One, refusing to up its offer for the Peppa Pig owner after its initial bid was rejected, potentially leaving the door open for rumoured private equity bidder KKR.

"ITV continues to believe in the strategic logic and potential benefits of acquiring eOne but has a clear view of the value of the business, recognising that this value would need to be verified by appropriate due diligence," the broadcaster said in a statement mid-morning on Thursday.

"It appears this value is different to the level at which the board of eOne would currently engage in a more formal process."

The FTSE 100 group has approached the Toronto-based, London-listed company with an offer that valued eOne at 236p per share but this was turned down as it was felt to undervalue the company and its prospects.

ITV argued at the time that this was a “significant premium” over eOne's share price prior to the impact of recent bid speculation, with the shares having tumbled from last year's peak above 360p to lows around 130p in February.

The broadcaster also said the proposal represented a premium of 19.3% over eOne’s share price on 8 August, which was the last business day before the offer.

Speculation since has suggested ITV was mulling a bid of 280p, valuing the deal at almost £1.2bn, while US private equity outfit KKR was also considering a bid, according to Bloombergreports.

ITV said on Thursday it would continue to search through what it said was a "healthy pipeline of potential investment opportunities" as it looks to diversify its business away from a reliance on UK TV advertising.

ITV shares spiked up 1.7% to 205.3p on the announcement, while eOne plunged more than 13% to 217.26p, having topped 250p earlier this month.